Method and system for a deferred variable annuity with benefit payments as a function of an adjustment factor

ABSTRACT

A computer implemented data processing system and method processes data associated with a deferred variable annuity contract during the accumulation phase for a relevant life. The data includes a payment base value, a contract value, a withdrawal percent and a formula for determining an available benefit payment amount without reduction of the payment base value. The formula includes as factors the payment base value, the withdrawal percent, and an adjustment factor dependent on a period of deferral from a time a benefit payment withdrawal was first available until a first benefit payment withdrawal request and a period of time since the first benefit payment withdrawal request.

CROSS-REFERENCE TO RELATED APPLICATIONS

This application is a continuation application of co-pending U.S. patentapplication Ser. No. 11/986,533 entitled METHOD AND SYSTEM FOR ADEFERRED VARIABLE ANNUITY WITH LIFETIME BENEFIT PAYMENTS AS A FUNCTIONOF AN INFLATION ADJUSTMENT FACTOR, filed Nov. 21, 2007, whichapplication claims priority to and benefit of U.S. Provisional PatentApplication No. 60/961,787, filed Jul. 24, 2007, the entire contents ofall of which are herein incorporated by reference for all purposes.

BACKGROUND OF THE INVENTION

1. Field of the Invention

The present invention relates to a method and system for providing adeferred variable annuity with lifetime benefit payments; and moreparticularly, to a data processing method for administering a deferredvariable annuity contract for a relevant life, the annuity contracthaving a payment base, a contract value, and lifetime benefit payments,wherein the lifetime benefit payment available for each period is equalto: (a withdrawal percent)×(a withdrawal base)×(an adjustment factor),wherein the Withdrawal Percent is predetermined according to awithdrawal percent table and the inflation adjustment factor is modifiedover time.

2. Description of the Prior Art

An immediate annuity is typically used to provide an income streamwithin a predetermined length of time from the date the premium isreceived. The amount of income can be either fixed or variable in natureand typically these products do not provide an account value. A deferredannuity is typically used to provide accumulation and, potentially, afuture stream of annuity income. The deferred annuity comprises anaccumulation period during which the account value will vary with theunderlying investments and an annuitization period where the clientpurchases an immediate annuity with the account value available.Deferred and immediate annuities typically provide guaranteed income forlife which transfers some portion or all of the risk of outliving one saccumulated assets to the insurer.

One basis for distinguishing commonly available deferred annuities iswhether the annuity is classified as a ½ fixed annuity•or a ½ variableannuity•.

In a fixed annuity, the insurer guarantees a fixed rate of interestapplicable to each annuity deposit. Therefore, a fixed annuity isdesirable for those seeking a ½ safe•investment. The guaranteed interestrate may apply for a specified period of time, often one year or more.Often, a rate guaranteed for more than one year is called a ½ multi-yearguarantee•. The rate credited on a fixed annuity is reset periodically,moving in an amount and a direction that correlate the yields availableon fixed-income investments available to the insurer.

With a variable annuity, the annuity contract owner bears the investmentrisk. The relevant life typically has a choice of funds in which he/shecan direct where the annuity deposits will be invested. The variousfunds or sub-accounts may include stocks, bonds, money marketinstruments, mutual funds, and the like.

Variable annuity contracts typically provide a death benefit.Oftentimes, during the accumulation period this death benefit is relatedto the contract value. That is, if the sub-accounts backing the contractvalue have performed poorly, then the death benefit may be reduced to aninsignificant amount. After annuitization, the death benefit can be afunction of the remaining payments of the annuity at the time of therelevant life s death. Further, if the annuity contract does not providea guarantee (discussed below), the contract will terminate when thecontract value goes to zero or some other amount specified in thecontract or rider.

Annuity contracts may also provide guarantees in several differentvariations. A Guaranteed Minimum Death Benefit (GMDB) is a guaranteethat provides a minimum benefit at the death of the relevant liferegardless of the performance of the underlying investments. AGuaranteed Minimum Income Benefit (GMIB) is a guarantee that willprovide a specified income amount at the time the contract isannuitized. The income payment will be dependent on previously stateddetails set out in the contract. A Guaranteed Minimum AccumulationBenefit (GMAB) is a benefit that guarantees a specified contract valueat a certain date in the future, even if actual investment performanceof the contract is less than the guaranteed amount. A Guaranteed MinimumWithdrawal Benefit (GMWB) is a guarantee of income for a specifiedperiod of time, and in some versions, the income stream is guaranteedfor life without requiring annuitization as in the guaranteed minimumincome benefit. However, this guarantee will automatically annuitize thecontract if the contract value is reduced to zero or some other amountspecified in the contract or rider.

Most deferred variable annuity products in the prior art typicallydetermine the amount of the yearly lifetime benefit payments, if any, tobe a predetermined percentage (withdrawal percent) of a withdrawal base.The withdrawal percent is typically determined by a predeterminedwithdrawal percent table that provides a particular withdrawal percentfor each year of the relevant life s lifeaccording to each birthday ofthe relevant life. However, the effects of inflation are typically notconsidered when determining the respective withdrawal percents for thepredetermined withdrawal percent table, and further when applying therespective withdrawal percent to determine the respective lifetimebenefit payments.

Many financial products and systems have been disclosed. These includefinancial products with the following features: providing insuranceprotection against loss of retirement benefits, including providing forsubstitute continuing periodic payments into an investment account;administering a guaranteed benefit account that offers both a definedbenefit and a defined contribution plan; providing key investment andplanning tools for use by individuals in planning their retirement usinga computer, software program and the Internet; method and system usinglogic for data collection, modeling and report generation in aretirement planning system; issuing and managing a form of securityhaving an accumulation phase and a payout phase; providing for survivorincome-replacement benefits with a guaranteed rate of interest; afinancial instrument providing for the account holder to maintainliquidity in an account while at the same time receiving a guarantee oflifetime income and a guaranteed growth rate; and providing for acomputer-implemented method of funding. Each one of these prior artreferences suffers from at least the following disadvantage(s): theannuities do not provide lifetime benefit payments that are based on anadjustment factor, wherein the adjustment factor is modified over timeand helps to compensate for inflation.

Accordingly, there remains a need in the art for a data processingmethod for administering a deferred annuity contract for a relevant lifewherein the annuity contract has lifetime benefit payments, and thelifetime benefit payment for each period is determined by the followingformula:

LBP withdrawal=(a Withdrawal Percent)×(a Withdrawal Base)×(an AdjustmentFactor),

wherein the withdrawal percent is predetermined according to awithdrawal percent table and wherein the inflation adjustment factor ismodified over time.

SUMMARY OF THE INVENTION

The present invention provides a data processing method foradministering a deferred variable annuity contract during theaccumulation phase for a relevant life wherein the annuity contract haslifetime benefit payments, and wherein the lifetime benefit payment foreach period is determined by the following formula:

LBP withdrawal=(a Withdrawal Percent)×(a Withdrawal Base),

wherein the withdrawal percent is predetermined according to awithdrawal percent table and wherein the inflation adjustment factor ismodified over time. Preferably, the adjustment factor is related to thenumber of deferred years waited by the relevant life until a firstlifetime benefit payment withdrawal is requested. In prior art annuityproducts, the withdrawal percent is typically determined by apredetermined withdrawal percent table that provides a particularwithdrawal percent for each year of the relevant life s life accordingto each birthday of the relevant life. However, typical prior artvariable annuity products do not offer any inflation protection for thelifetime benefit payments. The present data processing methodadministers an annuity product having a payment base, a contract value,together with a guarantee of lifetime benefit payments.

Generally stated, the method of the invention calculates a payment basefor the annuity contract that is preferably a function of the previouspremium payments and withdrawals by the relevant life, and could includeinvestment performance on an annual or other basis (daily, monthly,etc.). The method of the invention calculates a contract value for theannuity contract. The method determines a withdrawal percent table forthe annuity contract that provides a particular withdrawal percent foreach respective attained age of the relevant life. In one embodiment,during the accumulation phase the system performs the following steps:(i) if requested by the relevant life, periodically accepting premiumpayments from the relevant life which increase the payment base and thecontract value; (ii) if requested by the relevant life, or if otherdefined criteria are reached, periodically calculating a lifetimebenefit payment withdrawal for the relevant life which decreases thecontract value, wherein the guaranteed lifetime benefit payment isdetermined by the following formula:

LBP withdrawal=(the Withdrawal Percent)×(a Withdrawal Base)×(anInflation Adjustment Factor),

wherein the withdrawal percent is predetermined according to awithdrawal percent table and wherein the adjustment factor is modifiedover time; and (iii) if requested by the relevant life, periodicallycalculating a withdrawal payment—that is in excess of the lifetimebenefit payment—to the relevant life from the contract value whichdecreases each of: the contract value and the payment base. Upon thedeath of the relevant life, the present method pays a death benefit to abeneficiary, wherein the death benefit is the greater of: (a) theguaranteed death benefit amount; and (b) the present contract value.

Preferably, the annuity contract of the data processing method is adeferred variable annuity and further includes sub-accounts whose marketperformance can cause the contract value to increase or decrease. Inother aspects of the invention, the annuity contract may be selectedfrom the group of fixed, combination variable/fixed, and equity indexedannuities.

In addition, the account may be subject to M, E & A, 12 b-1 and fundlevel charges. These charges may or may not be assessed against thecontract value.

The guaranteed death benefit is paid to the beneficiary only if therelevant life dies during the accumulation phase. However, a guaranteeddeath benefit may also be payable during annuitization as well. Thelifetime benefit payment may be paid once yearly or periodicallythroughout the year; however, there is a maximum lifetime benefitpayment for any given year. In one embodiment, the present method allowsthe relevant life to have the opportunity to request a lifetime benefitpayment during each period that is up to the greater of (i) (the PaymentBase)×(the Withdrawal Percent)×(the adjustment factor); and (ii) (theContract Value)×(the Withdrawal Percent)×(the adjustment factor).Therefore, in this embodiment, the lifetime benefit payment is not basedon a percentage of a fixed withdrawal base amount, and the withdrawalbase amount may increase depending on the performance of the underlyinginvestments of the annuity product and if the contract value is greaterthan the payment base during a given period. However, if the contractvalue is less than the payment base, then the available lifetime benefitpayment is a percentage (Withdrawal Percent) of the payment base timesthe adjustment factor.

The relevant life is eligible to take advantage of the withdrawalpercent provided by the predetermined withdrawal percent table, which isbased on the attained age years, which have completed in the relevantlife s lifetime. Accordingly, the relevant life has the opportunity torequest a lifetime benefit payment that has the potential to afford agreater monetary value at an earlier point in time and at an earlier agethan prior art annuity products. Further, the relevant life is protectedagainst inflation by deferring the first lifetime benefit payment forseveral years.

In one aspect, the value of the annuity payments, if necessary, equalsthe value of the most recent lifetime benefit payment. In other aspects,excess withdrawals, required minimum distributions or step-ups couldcause the value of the annuity payments or guaranteed lifetime benefitpayments to change.

In another aspect of the invention, there is provided a data processingmethod for administering a deferred variable annuity contract for arelevant life, the annuity contract having a payment base, a contractvalue and a guarantee of lifetime benefit payments, comprising the stepsof: (i) calculating a payment base; (ii) calculating a contract value;(iii) determining a withdrawal percent table; and (iv) calculating alifetime benefit payment, wherein the lifetime benefit payment isdetermined by the following formula:

LBP withdrawal=(the Withdrawal Percent)×(a Withdrawal Base)×(anInflation Adjustment Factor),

wherein the withdrawal percent is determined by said withdrawal percenttable and wherein the adjustment factor is modified over time.Preferably, the adjustment factor is related to the number of deferredyears waited by the relevant life until a first lifetime benefit paymentwithdrawal is requested.

The invention can comprise a deferred variable annuity contract having:(i) means for calculating a payment base; (ii) means for calculating acontract value; (iii) means for determining a withdrawal percent table;and (iv) means for calculating a lifetime benefit payment; wherein thelifetime benefit payment is determined by the following formula:

LBP withdrawal=(a Withdrawal Percent)×(a Withdrawal Base)×(an InflationAdjustment Factor),

wherein the withdrawal percent is predetermined according to awithdrawal percent table and wherein the adjustment factor is modifiedover time. Preferably, the adjustment factor is related to the number ofdeferred years waited by the relevant life until a first lifetimebenefit payment withdrawal is requested.

In a preferred embodiment, the adjustment factor is determined by thefollowing formula:

Inflation Adjustment Factor=[1+(a Predetermined Factor)×(the number ofdeferred years waited by the relevant life until a first lifetimebenefit payment withdrawal is requested)]^(Y), wherein Y is equal to(the number of the lifetime benefit payment withdrawal year, wherein theyear of the first lifetime benefit payment withdrawal is set as yearnumber 1).

The preferred predetermined factor is in the range of 0%-5.0%. Morepreferably, the predetermined factor is in the range of 0.05%-2.0%. Mostpreferably, the predetermined factor is equal to 0.25%.

In a preferred embodiment, (the Withdrawal Percent)×(the adjustmentfactor) must be equal to or less than a predetermined maximum percent.Preferably, the predetermined maximum percent is in the range of 0% to25.0%. More preferably, the predetermined maximum percent is in therange of 1.0% to 15.0%. Most preferably, the predetermined maximumpercent is equal to 10.0%.

In another embodiment, the present invention comprises a system foradministering a deferred variable annuity contract during theaccumulation phase for a relevant life, the annuity contract having apayment base value, a contract value, and lifetime benefit payments,comprising: a storage device; a processor coupled to the storage device,the storage device storing instructions that are utilized by theprocessor, the instructions comprising: (i) receiving information fromsaid relevant life in order to establish the deferred variable annuitycontract; (ii) receiving lifetime benefit payment withdrawal requestsfrom the relevant life; (iii) calculating a lifetime benefit payment;wherein the lifetime benefit payment withdrawal is determined accordingto the following formula:

LBP withdrawal=(a Withdrawal Percent)×(a Withdrawal Base)×(an Adjustmentfactor),

wherein the withdrawal percent is predetermined according to saidwithdrawal percent table, and wherein the inflation adjustment factor ismodified over time.

The present invention solves several of the problems associated withconventional administration of variable annuity contracts. Determinationof the lifetime benefit payment is accomplished via an improved formulathat provides the potential to protect against inflation. The relevantlife is afforded increased security by the availability of a potentiallyenhanced lifetime benefit payment at an earlier age and whichexponentially increases over time to keep up with inflation.Significantly, an adjustment factor is used to determine the withdrawalpayment and the adjustment factor is modified over time, and ispreferably related to the number of deferred years waited by therelevant life until a first lifetime benefit payment withdrawal isrequested.

Other objects, features, and characteristics of the present invention,as well as the methods of operation and functions of the relatedelements of the structure, and the combination of parts and economies ofmanufacture, will become more apparent upon consideration of thefollowing detailed description with reference to the accompanyingdrawings, all of which form a part of this specification.

BRIEF DESCRIPTION OF DRAWINGS

A further understanding of the present invention can be obtained byreference to a preferred embodiment set forth in the illustrations ofthe accompanying drawings. Although the illustrated embodiment is merelyexemplary of systems for carrying out the present invention, both theorganization and method of operation of the invention, in general,together with further objectives and advantages thereof, may be moreeasily understood by reference to the drawings and the followingdescription. The drawings are not intended to limit the scope of thisinvention, which is set forth with particularity in the claims asappended or as subsequently amended, but merely to clarify and exemplifythe invention.

For a more complete understanding of the present invention, reference isnow made to the following drawings in which:

FIG. 1 is a flow chart illustrating the manner in which a new annuitycontract application is processed;

FIG. 2 is a flow chart that illustrates in more detail the manner inwhich an annuity contract is established;

FIG. 3 is a flow chart that illustrates in more detail the manner inwhich an account value is set up;

FIG. 4 is a flow chart that illustrates in more detail the manner inwhich customer communication is established;

FIG. 5 is a flow chart illustrating the appropriate steps after awithdrawal is requested;

FIG. 6 is a flow chart illustrating a preferred embodiment of thepresent invention comprising a data processing method for administeringan annuity contract for a relevant life;

FIG. 7 is a diagram illustrating the system on which the methods of thepresent invention may be implemented in accordance with an embodiment ofthe present invention;

FIG. 8 depicts a table illustrating lifetime benefit payments issued tothe relevant life for annuities associated with various lifetime benefitplans along with a three supplemental tables in accordance with anembodiment of the present invention; and

FIG. 9 depicts a graph illustrating lifetime benefit payments issued tothe relevant life for annuities associated with various lifetime benefitplans in accordance with an embodiment of the present invention.

DESCRIPTION OF THE PREFERRED EMBODIMENTS

As required, a detailed illustrative embodiment of the present inventionis disclosed herein. However, techniques, systems and operatingstructures in accordance with the present invention may be embodied in awide variety of forms and modes, some of which may be quite differentfrom those in the disclosed embodiment. Consequently, the specificstructural and functional details disclosed herein are merelyrepresentative, yet in that regard, they are deemed to afford the bestembodiment for purposes of disclosure and to provide a basis for theclaims herein, which define the scope of the present invention. They aredeemed to afford the best embodiment for purposes of disclosure; butshould not be construed as limiting the scope of the invention. Thefollowing presents a detailed description of the preferred embodiment ofthe present invention.

The present invention comprises a data processing method foradministering a deferred variable annuity contract having a paymentbase, a contract value, and lifetime benefit payments. As used herein,the term ½ annuity contract•means a set of rules and other data that arereflected in a computer processing system for operations of the annuityproduct. In the present invention, the lifetime benefit available foreach period is determined by the following formula:

LBP withdrawal=(a Withdrawal Percent)×(a Withdrawal Base)×(an inflationadjustment factor),

wherein the withdrawal percent is predetermined according to awithdrawal percent table and wherein the adjustment factor is modifiedover time. Preferably, the adjustment factor is related to the number ofdeferred years waited by the relevant life until a first lifetimebenefit payment withdrawal is requested. The present data processingmethod is preferably in the form of a rider to a variable annuitycontract. In another aspect of the invention, the present dataprocessing method is not in the form of a rider, but is a part of thebase contract. In exchange for paying higher fees, the relevant lifereceives several advantages by selecting the method and system of thepresent invention which provides an inflation adjusted lifetime benefitpayment available for each period that is related to a withdrawalpercent table and further including an adjustment factor that ismodified over time, and is preferably related to the number of deferredyears waited by the relevant life until a first lifetime benefit paymentwithdrawal is requested. These advantages include the following: Therelevant life will have the opportunity to request a lifetime benefitpayment during each period that is based on a withdrawal percent that isprovided by a predetermined withdrawal percent table and wherein thelifetime benefit payment is adjusted according to an inflationadjustment factor. The relevant life is eligible to take advantage ofthe adjustment factor regardless of his actual age. The adjustmentfactor is modified over time, and is preferably related to the number ofdeferred years waited by the relevant life until a first lifetimebenefit payment withdrawal is requested. That is, the greater the numberof deferred years, then the greater the impact of the adjustment factor.Accordingly, depending on the number of deferred years waited by therelevant life until a first lifetime benefit payment withdrawal isrequested, the relevant life has the opportunity to request a lifetimebenefit payment that has the potential to afford a greater monetaryvalue at an earlier point in time in order to help compensate forinflation, unlike the prior art annuity products. This advantage isespecially beneficial to a person who purchases the annuity contract ata relatively early age and waits many years prior to requesting a firstwithdrawal payment. Significantly, by deferring the first withdrawalpayment for a number of years, the relevant life takes advantage of apotentially higher withdrawal percent value to help compensate forinflation, as compared to prior art annuity products which providewithdrawal payments that do not include any provisions to protectagainst inflation. Therefore, the present invention has the ability topay a living benefit that will include annual inflation adjustments ifthe payments begin in the future using future dollars rather than todays dollars. Further, the present invention may provide an annuallyincreasing guaranteed living benefit payment to address potentialinflation concerns. Accordingly, the present invention provides greaterincome potential in the future.

The present invention comprises a data processing method foradministering a deferred variable annuity contract for a relevant life,the annuity contract having a payment base, a contract value andlifetime benefit payments, comprising the steps of: (i) calculating apayment base; (ii) calculating a contract value; (iii) determining awithdrawal percent table; and (iv) calculating a lifetime benefitpayment wherein the lifetime benefit payment is determined by thefollowing formula:

LBP withdrawal=(the Withdrawal Percent)×(a Withdrawal Base)×(anInflation Adjustment Factor),

wherein the withdrawal percent is determined by said withdrawal percenttable and wherein the inflation adjustment factor is modified over time.Preferably, the adjustment factor is related to the number of deferredyears waited by the relevant life until a first lifetime benefit paymentwithdrawal is requested.

In another embodiment, the present invention comprises a system foradministering a deferred variable annuity contract during theaccumulation phase for a relevant life, the annuity contract having apayment base value, a contract value, and lifetime benefit payments,comprising: a storage device; a processor coupled to the storage device,the storage device storing instructions that are utilized by theprocessor, the instructions comprising: (i) receiving information fromsaid relevant life in order to establish the deferred variable annuitycontract; (ii) receiving lifetime benefit payment withdrawal requestsfrom the relevant life; (iii) calculating a lifetime benefit payment;wherein the lifetime benefit payment withdrawal is determined accordingto the following formula:

LBP withdrawal=(a Withdrawal Percent)×(a Withdrawal Base)×(an AdjustmentFactor),

wherein the withdrawal Percent is predetermined according to saidwithdrawal percent table and wherein the inflation adjustment factor ismodified over time.

It should be understood that as used herein the term ½periodically•includes method steps that in certain aspects may only beperformed once. In other aspects, such “periodically” performed methodsteps may be performed more than once as described herein.

The following definitions are given hereunder to better understand termsused in the specification.

“Relevant Life” or “Covered Life”: The term relevant life or coveredlife is the governing life for determination of the living benefitsprovided under this illustrative embodiment. Covered life (or relevantlife) may refer to any one or more of the following: an owner, jointowner, annuitant, joint annuitant, co-owner, co-annuitant orbeneficiary.

“Withdrawal Base”: The withdrawal base is the amount used in oneembodiment of the present invention to determine the lifetime benefitpayment. Preferably, the withdrawal base may be equal to the amount ofthe original premium, the payment base value, the contract value, or thegreater of the payment base value and the contract value.

“Payment Base”: The payment base (PB) (or more accurately the paymentbase value) is the amount used in one embodiment of the presentinvention to determine the lifetime benefit payment and the ridercharge. In one embodiment of the present invention, the initial paymentbase value equals the initial premium.

“Premium”: 100% of the dollar amount of the initial or subsequentpremium payments deposited into the contract before application of anysales charges or payment enhancements.

“Withdrawal Request”: A request made by the relevant life to withdrawfunds during the “accumulation phase” of the contract. One type ofwithdrawal is a lifetime benefit payment. Any withdrawal that is inexcess of the lifetime benefit payment may: (i) decrease the contractvalue below the minimum contract value; (ii) decrease the payment basevalue; and (iii) decrease the guaranteed death benefit.

“Lifetime Benefit Payment”: A benefit payment that is available untilthe death of the relevant life. The lifetime benefit payment may be paidyearly in one embodiment. The total lifetime benefit payment for theyear may also be distributed monthly, quarterly or any other definedperiod. Preferably, the lifetime benefit payment is only available ifthe covered life age is 60 (or other predetermined age) or older.Preferably, if the relevant life is age 59 (or other predetermined age)or younger, the LBP is equal to zero. Other age restrictions can also beutilized for the lifetime benefit payment. Preferably, the lifetimebenefit payment is determined by the following formula:

LBP=(a Withdrawal Percent)×(a Withdrawal Base)×(an Adjustment Factor),

wherein the withdrawal percent is predetermined according to awithdrawal percent table and wherein the adjustment factor is modifiedover time. Preferably, the adjustment factor is related to the number ofdeferred years waited by the relevant life until a first lifetimebenefit payment withdrawal is requested. It should be understood that inother embodiments of the present invention, other formulas may beutilized for determining the lifetime benefit payment.

“Contract Value”: The contract value (CV) is a numerical measure of therelative worth of a variable annuity product during the accumulationphase. The contract value is determined by adding the amount of purchasepayments made during the accumulation phase, deducting management fees,deducting contract fees, deducting optional rider fees and surrendersmade by the owner, and adjusting for the relative increase (or decrease)of the investment option(s) chosen by the owner. It should be understoodthat in other embodiments of the present invention, other formulas maybe utilized for determining the contract value.

“Sub-account”: Variable account investments within the variable annuitycontract, such as mutual funds, stocks and bonds.

“Withdrawal”: Also known as a “surrender”, a relevant life may withdrawup to the contract value at any time.

“Death Benefit”: The death benefit provision guarantees that upon thedeath of the relevant life a death benefit (DB) is paid to a beneficiarynamed in the contract that is equal to the greater of the guaranteeddeath benefit or the contract value as of the date the annuity companyreceives due proof of death. It should be understood that in otherembodiments of the present invention, other formulas may be utilized fordetermining the guaranteed death benefit.

“Benefit Amount”: In one embodiment of the present invention, thebenefit amount is used to calculate that amount of the death benefit.Preferably, the benefit amount is equal to the premium payments minusany lifetime benefit payments or withdrawals.

“AMF”: Annual Maintenance Fee.

“Annuity Commencement Date”: The annuity commencement date (ACD) is thedate upon which the contract enters the “annuitization phase”.

“Withdrawal Percent”: In one embodiment of the present invention, thewithdrawal percent (WP) is used to determine the amount of the lifetimebenefit payment. It should be understood that in other embodiments ofthe present invention, other formulas may be utilized for determiningthe lifetime benefit payment.

“PB increase”: Payment Base increase.

“Adjustment Factor”: A factor that is included in the formula that isused when determining the lifetime benefit payment and which helps toprotect against inflation. Preferably, the adjustment factor is modifiedover time and is related to the number of deferred years waited by therelevant life until a first lifetime benefit payment withdrawal isrequested.

“Step-Up”: An increase to the payment base value that is available ifthe contract value increases because of favorable performance of theunderlying investments. Preferably, the step-up is guaranteed at apredetermined percentage.

“Partial Surrender”: Partial surrender means the gross amount of thepartial surrender and will include any applicable contingent deferredsales charges.

“Covered Life Change”: Any contractual change before ACD that causes achange in the covered life will result in a reset in the benefitsprovided under the rider and allows the issuing company to impose thefund allocation restrictions.

“Annuity Contract”: The term annuity contract means a set of rules andother data that are reflected in a computer processing system foroperations of the annuity product.

“Issue Rules”: The issuance of a contract may be subject to establishedrequirements known as issue rules.

The following detailed illustrative embodiment(s) is presented toprovide a more complete understanding of the invention. The specifictechniques, systems, and operating structures set forth to illustratethe principles and practice of the invention may be embodied in a widevariety of sizes, shapes, forms and modes, some of which may be quitedifferent from those in the disclosed embodiment. Consequently, thespecific structural and functional details disclosed herein areexemplary. They are deemed to afford the best embodiment for purposes ofdisclosure; but should not be construed as limiting the scope of theinvention.

Covered Life in Single and Joint/Spousal Election(s)

The covered life, or relevant life, may have a single life election orjoint/spousal continuation election as described more fully herein.

Single Life Election:

If a natural owner, the covered life is the owner and the joint owner(if any) on the rider effective date. If a non-natural owner, thecovered life is the annuitant on the rider effective date. Allage-contingent benefit provisions are based on the attained age of theoldest covered life.

Joint/Spousal Continuation Election:

If a natural owner, the covered life is both spouses (as defined byFederal Law). All age-contingent benefit provisions are based on theattained age of the youngest covered life.

Issues Rules

The following issue rules are set forth to provide a more completeunderstanding of this illustrative embodiment of the present invention.It should be understood by those skilled in the art that these issuerules are set forth for illustrative purposes only and that other rulesmay be utilized. Accordingly, the issue rules set forth below should notbe construed as limiting the scope of the invention.

The issue rules may include a maximum issue age. In one embodiment, theriders are not available if any covered life or annuitant is age 81 (orother predetermined age) or greater on the rider effective date. Inanother embodiment, the riders are not available if any covered life orannuitant is age 76 (or other predetermined age) or greater on the Ridereffective date. The rider may be elected on contract issue orpost-issue.

Single Life Election: No additional requirements

Joint/Spousal Continuation Election: (This may also includeco-annuitants)

One of the following must apply:

-   -   If a natural owner purchases Joint/Spousal election, and adds a        spousal joint owner, then the owner can name anyone else as the        designated beneficiary, because by contract disposition, the        joint owner will receive the death benefit.    -   If a natural owner purchases joint/spousal election, and does        not add a joint owner, then the owner must name their spouse as        the designated beneficiary.    -   If a non-natural owner purchases joint/spousal election, then        the annuitant s spouse must be the designated beneficiary.    -   A joint owner who is not the owner s spouse is not allowed.

Calculation of the Withdrawal Percent (WP)

The Withdrawal Percent (WP) is used to determine the amount of thelifetime benefit payment. In a preferred embodiment, a predeterminedwithdrawal percent table (below) provides a particular WithdrawalPercent for each respective attained age. As shown below, the withdrawalpercent table may group certain attained age ranges into the samewithdrawal percent. Alternatively, each age of the relevant life may beprovided with a different Withdrawal Percent. Preferably, there is aminimum and maximum withdrawal percent for any given attained age in thewithdrawal percent table.

In another embodiment, the WP is determined at the later of: (i) theattained age of the covered life on the most recent contract anniversaryprior to the first withdrawal, or (ii) the contract anniversaryimmediately following the covered life s 60^(th) birthday (or otherpredetermined age).

Withdrawal Percentage Table

(Note: the following percentages and ages, if ages are in fact used, canvary)

5.0% for attained ages 60 to 64;

5.5% for attained ages 65 to 69;

6.0% for attained ages 70 to 74;

6.5% for attained ages 75 to 79; and

7.0% for attained ages 80 and above.

Calculation of the Payment Base (PB)

The Payment Base (PB) (or more accurately payment base value) is theamount used to determine the lifetime benefit payment (LBP) and therider charge.

A total partial surrender amount in a contract year that exceeds the LBPby not more than $0.12 (the tolerance amount) will be deemed not morethan the LBP. This provision recognizes that owners may take the LBP ininstallments over the year, and the amount of installment may round theproportional distribution amount to the higher cent. Therefore, ownersintended to stay within the LBP may exceed it by only a few cents. Themaximum PB is $5,000,000.

If this rider is effective on the contract issue date, then the PBequals the X % of the initial premium. If this rider is effective afterthe contract issue date, then the PB equals 100% of the dollar amount ofthe contract value on the rider effective date, less any paymentenhancements received in the last twelve months.

When subsequent premium payments are received, the PB will be increasedby 100% of the dollar amount of the subsequent premium payment. Whenevera partial surrender is made prior to the contract anniversaryimmediately following the covered life s 60^(th) birthday (or otherpredetermined age), the payment base is reduced for an adjustmentdefined below.

The ½ threshold•definition is as follows: 5% single/4.5% joint/spousalmultiplied by the greater of the payment base or contract value at thebeginning of the contract year plus subsequent premiums prior to apartial surrender.

For cumulative partial surrenders during each contract year that areequal to or less than the threshold, the adjustment is equal to thedollar amount of the partial surrender. For any partial surrender thatfirst causes cumulative partial surrenders during the contract year toexceed the threshold, the adjustment is the dollar amount of the partialsurrender that does not exceed the threshold. For the portion of thewithdrawal that exceeds the threshold, the adjustment is a factor. Thefactor is as follows:

1−(A/(B−C)) where

-   -   A=partial surrenders during the contract year in excess of the        threshold;    -   B=contract value immediately prior to the partial surrender; and    -   C=the threshold, less any prior partial surrenders during the        contract year. If C results in a negative number, C becomes        zero.

For partial surrenders during each contract year, where the sum of priorpartial surrenders are in excess of the threshold, the adjustment is afactor. The factor is applied to the payment base immediately before thesurrender. The factor is as follows:

1−(A/B) where

-   -   A=the amount of the partial surrender;    -   B=contract value immediately prior to the partial surrender.

Whenever a partial surrender is made on or after the contractanniversary immediately following the covered life s 60^(th) birthday(or other predetermined age), the PB will be equal to the amountdetermined as follows:

-   -   If the total partial surrenders since the most recent contract        anniversary are equal to or less than the current lifetime        benefit payment (LBP), the PB is not reduced by the amount of        the partial surrender.    -   If the total partial surrenders since most recent contract        anniversary are more than the current LBP, but all partial        surrenders were paid under the Automatic Income Required Minimum        Distribution (AI RMD), the PB is not reduced by the amount of        partial surrender.

For any partial surrender that first causes cumulative partialsurrenders during the contract year to exceed the current LBP and theRMD exception above does not apply, the adjustment is a factor. Thefactor is as follows:

1−(A/(B−C)) where

-   -   A=partial surrenders during the contract year in excess of the        LBP;    -   B=contract value immediately prior to the partial surrender; and    -   C=the LBP, less any prior partial surrenders during the contract        year. If C results in a negative number, C becomes zero.

For additional partial surrender(s) in a contract year, where the sum ofall prior partial surrenders exceed the current LBP, the PB will bereduced by applying a factor. The factor is as follows:

1−(A/B) where

-   -   A=the amount of the partial surrender;    -   B=contract value immediately prior to the partial surrender.

Benefit Increase Provision

In one embodiment, the withdrawal percent will be set at the attainedage of the first withdrawal and will not increase thereafter. In anotherembodiment, the benefit increase is facilitated through an increase inthe payment base.

On every contract anniversary up to and including the contractanniversary immediately following the covered life s 80^(th) birthday(or other predetermined age), it will be determined if an increase inthe PB is applicable. If an increase is applicable, the PB will increaseby the factor below, subject to a minimum of zero and a maximum of 10%(note: the percentage could change or it could be a full step-up (nolimit)):

(contract value prior to rider charge taken on currentanniversary/maximum contract value)−1

-   -   where maximum contract value equals the greater of (A) or (B)        below:        -   (A) the contract value on the rider effective date, plus            premiums received after the rider effective date;        -   (B) the contract value on each subsequent contract            anniversary, excluding the current contract anniversary plus            premiums received after the contract anniversary date.            (Similar to MAV except that there is no adjustment for            withdrawals.)            The WP is locked in on the date of the first withdrawal.

In another embodiment, the benefit increase is facilitated through aninflation adjustment factor. Preferably, the inflation adjustment factoris determined by a formula that is related to the number of deferredyears waited by the relevant life until a first lifetime benefit paymentwithdrawal is requested. The formula for determining the inflationadjustment factor is predetermined by the company issuing the annuity.In a preferred embodiment, the inflation adjustment factor is determinedby the following formula:

Inflation Adjustment Factor=[1+(a predetermined inflation factor)×(thenumber of deferred years waited by the relevant life until a firstlifetime benefit payment withdrawal is requested)]^(Y), wherein Y isequal to the number of the lifetime benefit payment withdrawal year,wherein the year of the first lifetime benefit payment withdrawal is setas year number 1).Preferably, the predetermined inflation factor is in the range of0%-5.0%. More preferably, the predetermined inflation factor is in therange of 0.05%-2.0%. Most preferably, the predetermined inflation factoris equal to 0.25%.

In a preferred embodiment, (the Withdrawal Percent)×(the InflationAdjustment Factor) must be equal to or less then a predetermined maximumpercent. Preferably, the predetermined maximum percent is in the rangeof 0% to 25.0%. More preferably, the predetermined maximum percent is inthe range of 1.0% to 15.0%. Most preferably, the predetermined maximumpercent is equal to 10.0%.

Calculation of the Lifetime Benefit Payment

The LBP is available until the death of any covered life or until thewithdrawal benefit is revoked.

A total partial surrender amount in a contract year that exceeds the LBPby not more than $0.12 (the tolerance amount) will be deemed not morethan the LBP. This provision recognizes that owners may take the LBP ininstallments over the year, and the amount of installment may round theproportional distribution amount to the higher cent. Therefore, ownersintended to stay within the LBP may exceed it by only a few cents.

On the Rider effective date, the following applies to the calculation ofthe LBP.

-   -   If the covered life is age 60 (or other predetermined age) or        older on the rider effective date, the LBP is equal to the        payment base multiplied by the WP as provided by the        predetermined withdrawal percent table and further multiplied by        an inflation adjustment factor (described hereinabove).    -   If the covered life is Age 59 (or other predetermined age) or        younger on the rider effective date, the LBP is equal to zero.

On any contract anniversary immediately following the covered life s60^(th) birthday (or other predetermined age), the following describesin more detail the calculation of the LBP.

The LBP is equal to the WP multiplied by the withdrawal base and furthermultiplied by an inflation adjustment factor. The withdrawal base may beequal to the original premium, the payment base, the contract value orthe greater of payment base or the contract value on the anniversary forboth time-based, Age-Based and the Market-Based Riders, single andspousal. The LBP can fluctuate year to year due to market performance,but will never be lower than the WP multiplied by the PB and furthermultiplied by an inflation adjustment factor as long as the covered lifehas reached the age of 60 (or other predetermined age). In addition, ifthe account value on the anniversary exceeds the PB, the LBP maydecrease in future years but will never be less than the PB multipliedby the WP and further multiplied by an inflation adjustment factor.

When a subsequent premium payment is made after the contract anniversaryimmediately following the covered life s 60^(th) birthday (or otherpredetermined age), the LBP is equal to the greater of: (i) the WP, onthe most recent contract anniversary, multiplied by the greater of thePB or the contract value immediately after the subsequent premium isreceived and further multiplied by an inflation adjustment factor, or(ii) the prior LBP.

Whenever a partial surrender is made on or after the contractanniversary immediately following the covered life s 60^(th) birthday(or other predetermined age):

-   -   If the PB is zero due to withdrawals, the LBP is equal to zero.        During the deferral stage, subsequent premiums may be made to        re-establish the PB and the LBP.

The LBP will be equal to the amount determined in either one as follows:

-   -   If the total partial surrenders since the most recent contract        anniversary are equal to or less than the current lifetime        benefit payment (LBP), the LBP is equal to the LBP immediately        prior to the partial surrender.    -   If the total partial surrenders since the most recent contract        anniversary are more than the current LBP, but all partial        surrenders were paid under the Automatic Income Required Minimum        Distribution (AI RMD), the provisions of above will apply.    -   If the total partial surrenders since the most recent contract        anniversary are more than the current LBP and the AI RMD        exception above does not apply, the LBP is reset to the WP on        the most recent contract anniversary multiplied by the greater        of the PB or contract value immediately after the partial        surrender and further multiplied by an inflation adjustment        factor.

The contract owner may request an amount less than, equal to, or greaterthan the lifetime benefit payment. Total partial surrenders taken duringa contract year on or after the contract anniversary immediatelyfollowing the covered life s 60 birthday (or other predetermined age)which exceed the LBP may reduce future LBP values and may reduce the PB.If the total amount requested by the contract owner during a contractyear is less than the lifetime benefit payment, the excess cannot becarried over to increase the future years lifetime benefit payments.

Contingent Deferred Sales Charge (CDSC)′ Free Up to the Amount of theLBP

If the LBP exceeds the actual withdrawal amount (AWA) on the most recentcontract anniversary, any contingent deferred sales charge (CDSC) willbe waived up to the LBP amount.

Death Benefit Before Annuity Commencement Date

For both single and joint/spousal election, a death benefit may beavailable on the death of any owner or annuitant. For joint/spousalelection only, no death benefit will be available when a covered life isthe beneficiary, and the beneficiary dies. The death benefit provisionguarantees that upon death, a death benefit (DB) will be paid equal tothe greater of the death benefit or the contract value as of the dateproof of death is received. The rider charge is not assessed on death.

When proof of death is processed, the contract will go into suspensemode. No charges will apply during that period. The amount available tobe paid as a death benefit under the terms of the rider is a return ofthe premium adjusted for subsequent premium payments and partialsurrenders.

At the rider effective date:

-   -   If the rider is effective on the contract issue date, then the        DB equals the initial premium.    -   If the rider is effective after the Contract Issue Date, then        the DB equals 100% of the dollar amount of the Contract Value on        the Rider effective date, less any bonus payments paid into the        contract by the company in the last 12 months.

When a subsequent premium payment is received, the DB will be increasedby 100% of the dollar amount of the subsequent premium payment. If thewithdrawal feature is revoked, all future withdrawals from the deathbenefit will be fully proportional as of the date it is revoked.

Whenever a partial surrender is made prior to the contract anniversaryimmediately following the covered life s 6 b birthday (or otherpredetermined age), the death benefit is reduced for an adjustmentdefined below.

For the ½ threshold•definition, see the definition described in thesection entitled ½ Calculation of the Payment Base•supra.

For cumulative partial surrenders during each contract year that areequal to or less than the threshold, the adjustment is the dollar amountof the partial surrender. For any partial surrender that first causescumulative partial surrenders during the contract year to exceed thethreshold, the adjustment is the dollar amount of the partial surrenderthat does not exceed the threshold and the adjustment for the remainingportion of the partial surrender is a factor. The factor is applied tothe portion of the death benefit that exceeds the threshold. The factoris defined as follows:

1−(A/(B−C)) where

-   -   A=partial surrenders during the contract year in excess of the        threshold;    -   B=contract value immediately prior to the partial surrender; and    -   C=the threshold less any prior partial surrenders during the        contract year. If C results in a negative number, C becomes        zero.

For partial surrenders during each contract year, where the sum of theprior partial surrenders in the year that are in excess of thethreshold, the adjustment is a factor. The factor is applied to theadjusted death benefit immediately before the surrender. The factor isdefined as follows:

1−(A/B) where

-   -   A=the amount of the partial surrender;    -   B=contract value immediately prior to the partial surrender.

Whenever a partial surrender is made on or after the contractanniversary immediately following the covered life s 6 b birthday (orother predetermined age), the DB will be equal to the amount determinedas follows:

-   -   If the total partial surrenders since the most recent contract        anniversary are equal to or less than the current lifetime        benefit payment (LBP), the DB becomes the DB immediately prior        to the partial surrender, less the amount of partial surrender,        less the amount of partial surrender paid out of the general        account of the company.    -   If the total partial surrenders since the most recent contract        anniversary are more than the current LBP, but all partial        surrenders were paid under the Automatic Income RMD (AI RMD),        the DB becomes the DB immediately prior to the partial        surrender, less the amount of partial surrender, less the amount        of partial surrender paid out of the general account of the        company.    -   If the total partial surrenders since the most recent contract        anniversary exceed the total current LBP and the AI RMD        exception does not apply, the adjustment is the dollar amount of        the partial surrender that does not exceed the LBP, and the        adjustment for the remaining portion of the partial surrender is        a factor. The factor is applied to the portion of the Death        benefit that exceeds the LBP. The factor is as follows:

1−(A/(B−C)) where

-   -   A=partial surrenders during the contract year in excess of the        LBP;    -   B=contract value immediately prior to the partial surrender.    -   C=LBP less any prior partial surrenders during the contract        year. If C results in a negative number, C=0 (zero).

For partial surrenders during each contract year, where the sum of theprior partial surrenders in the year that are in excess of the currentLBP, the adjustment is a factor. The factor for adjustments for partialsurrenders for the DB is applied to the adjusted DB immediately beforethe surrender. The factor is as follows:

1−(A/B) where

-   -   A=the amount of the partial surrender;    -   B=contract value immediately prior to the partial surrender.

Contract Value (CV) Reduces Below Minimum Account Rules

The minimum contract value rules are an optional feature of the presentinvention and do not apply to the preferred embodiments. If the minimumcontract value rules are selected to be applied, then the followingrules are used. The minimum contract value (MCV) is defined as 20% orother predetermined percentage of the payment base on the date of awithdrawal request. Lifetime benefit payments cannot reduce the contractvalue below this minimum threshold. Only sub-account performance andwithdrawals in excess of the LBP can decrease the contract value belowthe MCV.

-   -   If total partial surrenders since the most recent contract        anniversary are less than or equal to the difference between the        contract value and the MCV, the contract value will be reduced        by the total partial surrender.    -   If the contract Value at the time of a partial surrender is less        than or equal to the MCV, the contract value will not be        decreased for the partial surrender. The requested partial        surrender will be paid out of the general account assets of the        company.    -   If the contract value immediately before the partial surrender        is greater than the MCV, but would drop below the MCV after the        partial surrender, the contract value will be liquidated to pay        the LBP only to the extent it would equal the MCV. The remaining        portion of the LBP that is not funded by the contract value will        be paid out of the general account assets of the company.

Covered Life Change(s)

Any contractual change before the annuity commencement date (ACD) whichcauses a change in the covered life will result in a reset in thebenefits provided under the rider, and allows fund allocationrestrictions to be imposed.

Covered life changes in the first 6 months of the contract issue date(or during another time period) will not cause a change in the DB or PB.However, the WP and LBP may change based on the attained age of thecovered life after the covered life change.

-   -   If the covered life is changed and a withdrawal has been taken,        both within the first 6 months from contract issue date (or        during another time period), then the LBP and WP will be        calculated at the time of the covered life change and will be        based on the new covered life s attained age on the rider        effective date.    -   If the covered life is changed and a withdrawal has not been        taken, both within the first 6 months from the contract issue        date (or during another time period), then the LBP and WP will        be calculated upon the first withdrawal:    -   If the first withdrawal is after the first 6 months and before        the first contract anniversary (or during another time period),        then the LBP and WP will be based on the new covered life s        attained age on the rider effective date.    -   If the first withdrawal occurs after the first contract        anniversary, then the LBP and WP will be calculated based on the        new covered life s attained age on the most recently attained        contract anniversary.    -   If the oldest covered life after the change is greater than the        age limitation of the rider at the time of the change, then the        rider will terminate, and the death benefit will be equal to the        contract value.

Single Life Election:

Covered life changes after the first 6 months of contract issue datewill cause a reset in the benefits. If the oldest covered life after thechange is equal to or less than the age limitation of the rider at thetime of the change, then either below will automatically apply.

-   -   If the rider is not currently available for sale, the withdrawal        feature of the rider will be revoked.        -   The existing rider will continue with respect to the death            benefit only.        -   The death benefit will be recalculated to the lesser of the            contract value or the DB on the effective date of the            covered life change.        -   The rider charge is assessed on the revocation date, and            then will no longer be assessed.    -   If the rider is currently available for sale, the existing rider        will continue with respect to all benefits, at the current        contract rider charge.        -   The PB amount will be reset to the minimum of the contract            value or the PB on the date of the change.        -   The DB will be reset to the minimum of the contract value or            the DB on the date of the change        -   The WP and LBP will be recalculated on the date of the            change, and will be based upon the following.        -   A. If withdrawals are taken prior to the first contract            anniversary, a new covered life s attained age on the rider            effective date will be used.        -   B. If withdrawals are taken after the first contract            anniversary, the new covered life s attained age on the            contract anniversary prior to the first withdrawal will be            used.        -   The maximum contract value will be recalculated to equal the            contact value on the date of the covered life change.

If the oldest covered life after the change is greater than the agelimitation of the rider at the time of the change, the rider willterminate, and the DB will be equal to the contract value. If the rideris no longer available for sale and the issue age of the rider haschanged (to be determined on a non-discriminatory basis), and a coveredlife change occurs, and it exceeds that newly determined age limitation,then rider will terminate, and the death benefit will be equal tocontract value.

Joint/Spousal Continuation Elections

Where covered life changes after the first 6 months of contract issuedate, and if the owner and owner s spouse are no longer married, forreasons other than death, then covered life changes may occur asfollows:

If surrenders have not been taken from the contract, then the PB, the DBand the MCV remain the same; the covered life will be reset and the WPscale will be based on the youngest covered life as of the date of thechange. Additionally, the following covered life changes may occur.

-   -   Owner may remove spouse as covered life.    -   Owner may remove spouse as a covered life and replace original        spouse with new spouse. (These changes do not have to happen on        the same day.)

If surrenders have been taken from the contract, then the followingcovered life changes may occur.

-   -   Owner may remove spouse as covered life.    -   The PB, the DB and the MCV remain the same.    -   The WP scale will be based on the attained age of the remaining        covered life as of the date of the change.    -   Any changes other than removing the spouse will follow the rules        below.

If the oldest covered life after the change is greater (older) than theage limitation of the rider at the time of the change, then the riderwill terminate. The death benefit will be equal to contract value.

If any other contractual change causes a change in the covered life, thefollowing may automatically apply:

-   -   If the oldest covered life after the change is equal to or less        (younger) than the age limitation of the rider at the time of        the change, then the withdrawal feature of the rider will be        revoked. The existing rider will continue with respect to the        death benefit only. The rider charge is assessed on revocation        date, and then will no longer be assessed.    -   If the oldest covered life after the change is greater (older)        than the age limitation of the rider at the time of the change,        then the rider will terminate. The death benefit will be equal        to the contract value. If the rider is no longer available for        sale and the issue age of the rider has been changed (to be        determined on a non-discriminatory basis), and a covered life        change occurs, and they exceed that newly determined age        limitation, then rider will terminate, and the death benefit        will be equal to the contract value.    -   If the spouse dies and is the primary beneficiary and the        covered life, then the owner may remove them from the contract.        The PB, DB and MCV will remain the same. The WP will be        recalculated as follows:    -   If there has been a partial surrender since the rider effective        date, then WP will remain at the current percentage.    -   If there has not been a partial surrender since the rider        effective date, then the WP will be based on the attained age of        the remaining covered life on the contract anniversary prior to        the first surrender.

Spousal Continuation Single Life Election:

In the event the contract owner dies and spousal continuation iselected, the contract value will increase to the DB value (the greaterof the contract value and the DB). The covered life will bere-determined on the date of the continuation. If the covered life isless than age 81 (or other predetermined age) at the time of thecontinuation, then either of the following will automatically apply:

-   -   If the rider is not currently available for sale, the withdrawal        feature of the rider will be revoked. The existing rider will        continue with respect to the death benefit only (i.e., the        withdrawal feature will terminate). The rider charge is not        assessed on the revocation date, and then no longer assessed.    -   If the rider is currently available for sale, the existing rider        will continue with respect to all benefits at the current        contract rider charge. The payment base and the death benefit        will be set equal to the contract value on the continuation        date. The LBP and WP will be recalculated on the continuation        date. The WP will be recalculated based on the age of the oldest        covered life on the effective date of the spousal continuation.        If the WP had previously been locked in, then it will become        unlocked and can change based on the next withdrawal. The        maximum contract value will be set to the contract value on the        continuation date.

If the covered life is greater than or equal to 81 (or otherpredetermined age) at the time of the continuation, the rider willterminate. The death benefit will be equal to the contract value.

Joint/Spousal Continuation Election

In the event that the contract owner dies and spousal continuation iselected, the contract value will increase to the DB value (the greaterof the contract value and the DB). The spouse may do the following.

Continue the Contract and the Rider.

The existing rider will continue with respect to all benefits, at thecurrent contract rider charge. The payment base will be equal to thegreater of contract value or payment base on the continuation date. TheLBP will be recalculated to equal the withdrawal percent multiplied bythe greater of the contract value or the payment base on thecontinuation date. The maximum contract value will be the greater of thepayment base or the contract value on the continuation date. The DB willbe equal to the bumped up contract value on the continuation date.

The WP recalculation rule:

-   -   The WP will remain at the current percentage if there has been a        partial surrender since the rider effective date.    -   If there has not been a partial surrender, the WP will be based        on the attained age of the remaining covered life on the        contract anniversary prior to the first surrender/withdrawal.        The contract owner can not name a new owner on the contract. The        contract owner can name a new beneficiary on the contract. Any        new beneficiary added to the contract will not be taken into        consideration as a covered life. The rider will terminate upon        the death of the surviving covered life.

Continue the Contract and Revoke the Withdrawal Feature of the Rider.

The charge is assessed on revocation date, and then no longer assessed.The covered life will be re-determined on the date of the continuationdate for death benefit purposes. If the covered life is greater than theage limitation at the time of continuation, the rider will terminate.The death benefit will be equal to contract value.

Effect of Death of Owner or Annuitant Before the Annuity CommencementDate.

The following tables describe the effect of the death of the owner orannuitant before the annuity commencement date.

TABLE 1 Single Life Election If the Deceased is And . . . And . . . Thenthe . . . Contract Owner There is a The annuitant is living Jointcontract owner surviving or deceased receives the DB, Rider contractowner terminates Contract There is no The annuitant is living Riderterminates Owner surviving or deceased Designated Beneficiary ContractOwner receives DB Contract There is no The annuitant is living Riderterminates Owner surviving or deceased Estate receives DB Contract Owneror Beneficiary Annuitant Contract Owner There is no contingent Contractcontinues, no is living annuitant and the DB is paid, Rider contractowner continues becomes the contingent annuitant Annuitant ContractOwner There is no contingent Rider terminates, is living annuitant andthe contract owner receives contract owner waives DB their right becomethe contingent annuitant Annuitant Contract Owner contingent annuitantis Contingent annuitant is living living becomes annuitant and thecontract and Rider continues Annuitant Contract Owner There is nocontingent Contract owner is non-natural annuitant receives DB, Riderperson terminatesContingent Annuitant becomes Annuitant

If the annuitant dies where there is a contingent annuitant (who isdifferent from the owner/annuitant), then the rider continues and allprovisions of the rider remain the same, there are no resets nor DBspaid. Upon the death of the last surviving covered life, a DB is paid tothe beneficiary, and the rider terminates.

TABLE 2 Joint/Spousal Continuation Election If the Deceased is And . . .And . . . Then the . . . Contract There is a The annuitant is living orThe surviving contract Owner surviving contract deceased owner continuesthe owner contract and rider, the contract value is increased to thedeath benefit value. Contract There is no The annuitant is living or Ifthe spouse is the sole Owner surviving contract deceased primarybeneficiary, owner follow spousal continuation rules for joint lifeelections Contract There is no The annuitant is living or Riderterminates Owner surviving contract deceased Estate receives DB owner orbeneficiary Annuitant Contract owner is If the spouse is the solenon-natural person primary beneficiary, follow spousal continuationrules for joint life elections Annuitant The owner is living There is aliving The rider continues; contingent annuitant upon the death of thelast surviving Covered Life, the rider will terminate.

Effect of Death After the Annuity Commencement Date.

The following table describes the effect of death after the annuitycommencement date.

TABLE 3 Single Life Election If the Deceased is And . . . And Then the .. . Annuitant The annuitant is Fixed Lifetime The lifetime contingencyalso the contract and Period ceases. The remaining owner Certain is DBis paid under Period elected Certain.

TABLE 4 Joint/Spousal Continuation Election If the Deceased is And . . .And Then the . . . Annuitant The annuitant is also Fixed Lifetime andPeriod The lifetime benefit the contract owner, and Certain is electedceases. The there is no surviving remaining DB is paid Joint Annuitantunder Period Certain. Annuitant The annuitant is also Fixed Joint andSurvivor Lifetime Benefit the contract owner, and Lifetime and Periodcontinues until death there is a surviving Joint Certain is elected oflast surviving Annuitant annuitant

Fund Allocation Restrictions

The right to restrict investment is reserved in any investment option inthe case of a change of covered life after six months. If the investmentoption restriction is imposed, the contract owner has the followingoptions:

-   -   Reallocate all existing money and all new premium to a        non-restricted investment option, an available asset allocation        program, or fund-of-fund investment option as may be offered        from time to time.    -   Revoke the Withdrawal Feature.        If the restrictions are violated, the withdrawal feature will be        revoked. The Death Benefit continues as is upon the date of        revocation.

Aggregation

For purposes of determining the PB under the rider, one or more deferredvariable annuity contracts issued with the rider attached in the samecalendar year can be treated as one contract. If the contracts areaggregated, the period will change over which withdrawals are measuredagainst the benefit payment.

The issuing company will treat the effective date of the election untilthe end of the calendar year as a contract year for the purposes of theLBP limit. A pro rata rider charge will be taken at the end of thatcalendar year. As long as total withdrawals in that period do not exceedthe LBP, the withdrawals will not necessitate a reset.

In future calendar years, the LBP limits will be aggregated and will beon a calendar year basis. In other words, withdrawals under allaggregated contracts in a calendar year will be compared against thecombined LBP limits for the aggregated contracts. If withdrawals exceedthose combined limits, the aggregate PB will be set to the combinedcontract values of the aggregated contracts. The LBP will then equalwithdrawal percent multiplied by the new PB.

If withdrawals do not exceed those combined limits, each withdrawal willreduce the PB dollar for dollar. The withdrawal benefits relating to thecontract value reaching zero will not apply until the contract value ofall aggregated contracts reaches zero.

The rider charge will be taken at the end of each calendar year. It willbe deducted pro rata from all of the sub-accounts and fixed accounts ofthe aggregated contracts. If the contract values of all aggregatedcontracts are reduced below our minimum account rules in effect, theannuity options will be offered as defined earlier in thisspecification. The options will pay the combined LBP.

Annuity Commencement Date

If the annuity reaches the maximum ACD, which is the later of the10^(th) contract anniversary and the date the annuitant reaches age 90,the contract must be annuitized unless it is agreed upon to extend theACD. In this circumstance, the contract may be annuitized under standardannuitization rules, but under no circumstances will the amount payablebe less than the LBP, provided that the certain period does not exceedthe Death Benefit remaining at the ACD divided by the LBP.

Single Life Election:

A fixed lifetime and Period Certain Payout will be issued. The lifetimeportion will be based on the Covered Life determined at ACD. The CoveredLife is the Annuitant for this payout option. If there is more than oneCovered Life, then the lifetime portion will be based on both CoveredLives. The Covered Lives will be the Annuitant and Joint Annuitant forthis payout option. The lifetime portion will terminate on the firstdeath of the two. The minimum amount paid to owner under this AnnuityOption will at least equal the remaining DB under this rider.

If the oldest Annuitant is age 59 (or other predetermined age) oryounger, the date the payments begin will be deferred until the oldestAnnuitant attains age 60 (or other predetermined age) and is eligible toreceive payments in a fixed dollar amount until the later of the deathof any Annuitant or a minimum number of years.

If the Annuitant(s) are alive and age 60 (or other predetermined age) orolder, payments will be received in a fixed dollar amount until thelater of the death of any Annuitant or a minimum number of years. Theminimum number of years that payments will be made is equal to theremaining DB under this rider divided by the product of the payment baseon the ACD multiplied by the greater of the WP and 5% Single (4½%Spousal).

${Single}\mspace{14mu} {Election}\mspace{11mu} \text{:}\mspace{14mu} \frac{DB}{{PB} \times {Max}\mspace{11mu} \left( {{WP},{5\%}} \right)}$${Joint}\text{/}{Spousal}\mspace{14mu} {Election}\mspace{11mu} \text{:}\mspace{14mu} \frac{DB}{{PB} \times {Max}\mspace{11mu} \left( {{WP},{4\frac{1}{2}\%}} \right)}$

This annualized amount will be paid over the greater of the minimumnumber of years, or until the death of any Annuitant, in the frequencythat is elected. The frequencies will be among those offered at thattime but will be no less frequent than annually. If, at the death of anyAnnuitant, payments have been made for less than the minimum number ofyears, the remaining scheduled period certain payments will be made tothe Beneficiary. A lump sum option is not available.

Joint/Spousal Continuation Election:

The minimum amount paid to owner under this Annuity Option will at leastequal the DB under this rider. If the younger Annuitant is alive and age59 (or other predetermined age) or younger, the date that payments beginwill be automatically deferred until the younger Annuitant attains age60 (or other predetermined age) and is eligible to receive payments in afixed dollar amount until the death of the last surviving Annuitant or aminimum number of years.

If the Annuitants are alive and the younger Annuitant is age 60 or older(or other predetermined age), payments will be received in a fixeddollar amount until the death of the last surviving Annuitant or aminimum number of years. The minimum number of years that payments willbe made is equal to the remaining DB under this rider divided by the LBPat annuitization. This annualized amount will be paid over the greaterof the minimum number of years, or until the death of the last survivingAnnuitant, in the frequency that is elected. The frequencies will beamong those offered at that time but will be no less frequent thanannually. If, at the death of the last surviving Annuitant, paymentshave been made for less than the minimum number of years, the remainingscheduled period certain payments will be made to the Beneficiary. Alump sum option is not available.

If both spouses are alive, the owner will be issued a Fixed Joint &Survivor Lifetime and Period Certain Payout. The Covered Life andCovered Life s spouse will be the Annuitant and Joint Annuitant for thispayout option. The lifetime benefit will terminate on the last death ofthe two. If one spouse is alive, the owner will be issued a FixedLifetime and Period Certain Payout. The lifetime portion will be basedon the Covered Life. The Covered Life is the Annuitant for this payoutoption. The lifetime benefit will terminate on the last death of theCovered Life.

Premium Restrictions

Prior company approval is required on all subsequent premium paymentsreceived after the first 12 months. The approval rules are as follows.

-   -   Any subsequent premium(s) will not be accepted if it brings the        total cumulative subsequent premiums in excess of $100,000        without prior approval.    -   Payment enhancements and employee gross-up are not to be        included in premium total.

Revoking the Withdrawal Feature

In one embodiment, at any time following the earlier of SpousalContinuation or the fifth anniversary of the Rider effective date, theContract Owner may elect to revoke the Withdrawal Feature of the Rider.The Payment Base will go to zero and the Withdrawal Percent will go toZero, and LBP will go to Zero.

On the date the withdrawal feature is revoked, a pro rata share of theRider charge is equal to the Rider charge percentage multiplied by thePB, multiplied by the number of days since the last charge was assessed,divided by 365. The Rider Charge will be assessed on the revocationdate, and then will no longer be assessed. The Death Benefit continuesas is upon the date of the revocation. No other living benefit may beelected upon the revocation of the Withdrawal Feature.

In another embodiment, the Contract Owner can not elect to revoke thewithdrawal Feature. However, the Withdrawal Feature can be revoked incertain circumstances by the issuing company.

Additional Annuity Contract(s) Rules

Additional terms of the contract(s) or rider(s) include the following.The benefits under the contract cannot be assigned. If the free lookprovision under the contract is exercised, the rider will terminate.

Subject to state approval, a rider will be made available on allcurrently available products issued on or after the date the rider islaunched for sale in the state of issue. This does not imply post-issueelection. Post-issue election will be determined on an as needed basis.

Regarding post-issue election, if the rider effective date is after thecontract issue date, then the period between the rider effective dateand the next contract anniversary will constitute a contract year.

If the rider effective date is after the contract issue date, then theperiod between the rider effective date and the next contractanniversary will constitute a contract year.

The following product-specific features and impacts are applicable. Theemployee gross-up is not considered premium for purposes of the paymentbase and death benefit. Payment enhancements are not considered premiumfor purposes of the payment base and death benefit. Front-end loads arenot taken from the premium for purposes of the payment base and deathbenefit.

Turning now to the figures, FIG. 1 illustrates the manner in which a newannuity contract application is processed. The new applicationprocessing routine starts (block 102) when an application is completed.The annuity contract application and initial premium are received by theinsurance company (block 104). The annuity contract is then establishedthrough the contract establishing routine (block 106) as furtherdescribed in FIG. 2. After the annuity contract is established, theaccount value is then set up through the account value set routine(block 108), via the computer systems, as further specified in FIG. 3.Thereafter customer communication is established through the customercommunication routine (block 110) as further specified in FIG. 4. Theapplication processing routine ends at (block 112).

FIG. 2 is a flow chart that illustrates in more detail the manner inwhich an annuity contract is established. The annuity contractestablishing routine starts at (block 202). After receiving the annuitycontract application, customer demographics are determined (block 204).The customer demographics and other data from the annuity contractapplication are transmitted to the insurance company by any suitablemeans, such as electronic transmission, facsimile transmission,telephonic transmission, and the like. The customer demographics may bescanned in or electronically entered into the computer system by theinsurance company after the demographic data is determined. Suchdemographic information may include age, gender, date of birth, socialsecurity number, address, marital status, and the like. The customerdemographics may be used for a variety of purposes, such asidentification purposes or to locate a relevant life by searchinghis/her social security number. The customer demographics are also usedwhen determining and/or calculating a variety of factors that arerelated to the annuity contract, such as benefit amount calculations,tax considerations, and the like. The types of customer demographicsthat are determined are generally related to the type of annuitycontract application that is filled out by the relevant life. Thespecific product election is determined (block 206). For example, thespecific product may be elected from a group of different variableannuity products, which each have different characteristics includingthe costs and fees as well as the liquidity features associatedtherewith. The election of optional riders is determined (block 208).For example, the optional riders may be elected from a group ofdifferent riders, which each have various guaranteed withdrawalfeatures. The election of investment options is determined (block 210).For example, the investment options include money market funds, bondfunds, stock funds, and the like. The beneficiary is elected (block212). In one aspect, this is the person who will collect the deathbenefits, if any. The source of the premium is determined (block 214).For example, the source of the premium may come from the relevant life spersonal funds or may come from another annuity in the form of atransfer. It should be understood that the steps taken for establishingthe contract may proceed in various orders and that the order shown inFIG. 2 is for illustrative purposes only and is only one embodiment ofsaid steps. The contract establishing routine ends at (block 216).

FIG. 3 is a flow chart that illustrates in more detail the manner inwhich an account value is set up. The account value set up routinestarts at (block 302). The funds are received (block 304). For example,the funds may be received via electronic transfer from a bank account orfrom another variable annuity holder. The funds are then allocated basedon investment elections (block 306). For example, the allocations can beaccomplished through a computerized system according to the investmentelections by the relevant life. Unit values are established for theannuity contract (block 308). For example, based on the performance ofthe underlying investment elections, unit values are established,preferably on a daily basis, for use in determining the resulting impacton the relevant life s annuity contract based on their specific fundallocations. For example the number of units that are applied to eachannuity contract is different for each relevant life based on the numberof units held within the annuity contract. It should be understood thatthe steps taken for setting up the account value may proceed in variousorders and that the order shown in FIG. 3 is for illustrative purposesonly and is only one embodiment of said steps. The account value set uproutine ends at (block 310).

FIG. 4 is a flow chart that illustrates in more detail the manner inwhich customer communication is established. The customer communicationroutine starts at (block 402). Communications with the customer may beaccomplished via email, facsimile, letter, telephone, and the like.Communication with the customer in one aspect relates to the issuing ofthe contract (block 404). Communication with the customer in one aspectrelates to the relevant confirmation of the previous contract issuancecommunication (block 406). Any regulatory-imposed communication with theclient is accomplished (block 408). It should be understood that thesteps taken for establishing customer communication may proceed invarious orders and that the order shown in FIG. 4 is for illustrativepurposes only and is only one embodiment of said steps. The customercommunication routine ends at (block 410).

FIG. 5 is a flow chart illustrating the appropriate steps after awithdrawal is requested. The withdrawal processing routine starts at(block 502). A withdrawal is first requested by the relevant life at(block 504). The withdrawal is then processed according to the contractrules (block 506). The contract rules are embedded in a computer systemor the like and vary according to the type of annuity contract. Forexample, in certain embodiments, a requested withdrawal amount by therelevant life may be limited by the contract rules to a specificwithdrawal percent that is applied by the computer system, and whereinthe contract rules specify the withdrawal percent according to the ageof the relevant life or the number of years since the contract wasestablished. Therefore, the contract rules govern the data flow in thecomputer system. The contract rules are administratively built into thecomputer system to obviate the need for manual intervention by theinsurance company. The account value is reduced according to thecontract rules (block 508). The death benefit is reduced according tothe contract rules (block 510). The withdrawal benefit is adjustedaccording to the contract rules (block 512). The check or other form ofpayment is issued (block 516). The appropriate tax forms are generatedat year end (block 518). It should be understood that the steps takenfor processing withdrawals may proceed in various orders and that theorder shown in FIG. 5 is for illustrative purposes only and is only oneembodiment of said steps. The withdrawal processing routine ends at(block 520).

FIG. 6 is a flow chart illustrating a preferred embodiment of thepresent invention comprising a data processing method for administeringa deferred variable annuity contract for a relevant life. It should beunderstood that the order of the successive method steps in each Figureherein is shown for the sake of illustrating but one example, and thatthe order of method steps can proceed in any variety of orders. In oneembodiment of the present invention, the invention comprises a dataprocessing method for administering a deferred variable annuity contractfor a relevant life, the annuity product having a payment base, acontract value and lifetime benefit payments.

The annuity contract processing routine starts (block 600), and themethod sometime later enters the calculation of the payment base phase(block 602) that is preferably a function of the previous premiumpayments and withdrawals by the relevant life. The present methoddetermines a withdrawal percent table that provides a particularwithdrawal percent based on each birthday of the relevant life (block604). If requested by the relevant life, the present method periodicallyaccepts premium payments from the relevant life (block 606) whichincrease the payment base and the contract value. If requested by therelevant life and the covered life is older than a predetermined age(i.e. 60 years old), the present method periodically calculates alifetime benefit payment for the relevant life (block 608) whichdecreases the contract value. If requested by the relevant life, thepresent method periodically calculates a withdrawal payment (block610)—that is in excess of the lifetime benefit payment—to the relevantlife from the contract value which decreases each of: the contract valueand the payment base. Preferably, the lifetime benefit payment isdetermined by the following formula:

LBP withdrawal=(the Withdrawal Percent)×(a Withdrawal Base)×(anAdjustment Factor),

wherein the withdrawal percent is predetermined according to awithdrawal percent table and wherein the adjustment factor is modifiedover time. Preferably the adjustment factor is related to the number ofdeferred years waited by the relevant life until a first lifetimebenefit payment withdrawal is requested.

Referring next to FIG. 7, depicted is a preferred embodiment of a systemon which the methods of the present invention may be implemented. In oneexample of the preferred embodiment, the insurance contract generatingsystem 714 would generally be used by an insurance provider 702, howeverthe system may be operated by any individual or organization offering aninsurance product as outlined in the present specification withoutdeparting from the spirit of the present invention. System 714 may beimplemented in many different ways such as part of a single standaloneserver or as a network server or servers, which may be distributedacross multiple computing systems and architectures. Preferably, thecentral processing computer or network server includes at least onecontroller or central processing unit (CPU or processor), at least onecommunication port or hub, at least one random access memory (RAM), atleast one read-only memory (ROM) and one or more databases or datastorage devices. All of these later elements are in communication withthe CPU to facilitate the operation of the network server.

The network server may also be configured in a distributed architecture,wherein the server components or modules are housed in separate units orlocations. Each of the modules described may be implemented as singleservers or one or more or all of the modules may be incorporated into asingle server. These servers will perform primary processing functionsand contain at a minimum, a RAM, a ROM, and a general controller orprocessor. In such an embodiment, each server is connected to acommunications hub or port that serves as a primary communication linkwith other servers, clients or user computers and other related devices.The communications hub or port may have minimal processing capabilityitself, serving primarily as a communications router. A variety ofcommunications protocols may be part of the system, including but notlimited to: Ethernet, SAP, SAS″, ATP, Bluetooth, GSM and TCP/IP.

In the preferred embodiment, all of the modules described herein areoperably inter-connected via a central communications bus 738. Thecommunications bus 738 is able to receive information from each of themodules, as well as to transmit information from one module to another.The insurance contract generating system 714 further includes a displaymodule 704, and a generating module 706. The generating module is usedfor generating an insurance contract, wherein the insurance contractprovides coverage to an individual or group for at least one eventdefined in the insurance contract.

The insurance contract generating system 714 additionally includes apayment module 708 for making payments to an insured individual or groupfor a predetermined period of time as defined by the deferred annuityinsurance contract.

The system further comprises a beneficiary module 710 for choosing abeneficiary to receive payments from the insurance provider in theinstance of an insured individual s death. Furthermore, the systemcomprises a dependent module 712 for offering an insurance contractstructured according to the methods of the present invention todependents of an individual eligible for the insurance contractdescribed herein.

Additionally, the insurance contract generating system 714 includes: astorage drive 716 for receiving data stored on a storage disc, aprocessing module 718 for processing digital data received by andcontained in the insurance contract generating system 714, acommunication module 720 for bi-directional communication with externaland telecommunications systems, a data storage module 722 for storingand managing digital information, a text data input module 724 forinputting data in the form of text, and a data input module 726 forconverting to digital format documents and images and inputting theminto the insurance contract generating system 714.

Finally, the insurance contract generating system 714 includes: an audiodata input module 728 for receiving and inputting audio information, anaudio data output module 730 for outputting data in audio format (i.e.recorded speech, synthetically generated speech from digital text, etc),a memory module 732 for temporarily storing information as it is beingprocessed by the processing module 718, a universal serial bus interfacemodule 734 for receiving and transmitting data to and from devicescapable of establishing a universal serial bus connection, and a digitaldata input interface module 736 for receiving data contained in digitalstorage devices.

Data storage device may include a hard magnetic disk drive, tape,optical storage units, CD-ROM drives, or flash memory. Such data storagedevices generally contain databases used in processing transactionsand/or calculations in accordance with the present invention. In oneembodiment, the database software creates and manages these databases.Insurance-related calculations and/or algorithms of the presentinvention are stored in storage device and executed by the CPU.

The data storage device may also store, for example, (i) a program(e.g., computer program code and/or a computer program product) adaptedto direct the processor in accordance with the present invention, andparticularly in accordance with the processes described in detailhereinafter with regard to the controller; (ii) a database adapted tostore information that may be utilized to store information required bythe program. The database includes multiple records, and each recordincludes fields that are specific to the present invention such asinterest rates, contract value, payment base value, step-ups, premiums,subscribers, payouts, claims, etc.

The program may be stored, for example, in a compressed, an uncompiledand/or an encrypted format, and may include computer program code. Theinstructions of the program may be read into a main memory of theprocessor from a computer-readable medium other than the data storagedevice, such as from a ROM or from a RAM. While execution of sequencesof instructions in the program causes the processor to perform theprocess steps described herein, hard-wired circuitry may be used inplace of, or in combination with, software instructions forimplementation of the processes of the present invention. Thus,embodiments of the present invention are not limited to any specificcombination of hardware and software.

Suitable computer program code may be provided for performing numerousfunctions such as providing a deferred annuity insurance contract to anindividual, generating a deferred annuity insurance contract, and makingpayments to the individual as defined in the deferred annuity insurancecontract. The functions described above are merely exemplary and shouldnot be considered exhaustive of the type of function, which may beperformed by the computer program code of the present inventions.

The computer program code required to implement the above functions (andthe other functions described herein) can be developed by a person ofordinary skill in the art, and is not described in detail herein.

The term “computer-readable medium” as used herein refers to any mediumthat provides or participates in providing instructions to the processorof the computing device (or any other processor of a device describedherein) for execution. Such a medium may take many forms, including butnot limited to, non-volatile media, volatile media, and transmissionmedia. Non-volatile media include, for example, optical or magneticdisks, such as memory. Volatile media include dynamic random accessmemory (DRAM), which typically constitutes the main memory. Common formsof computer-readable media include, for example, a floppy disk, aflexible disk, hard disk, magnetic tape, any other magnetic medium, aCD-ROM, DVD, any other optical medium, punch cards, paper tape, anyother physical medium with patterns of holes, a RAM, a PROM, an EPROM orEEPROM (electronically erasable programmable read-only memory), aFLASH-EEPROM, any other memory chip or cartridge, a carrier wave asdescribed hereinafter, or any other medium from which a computer canread.

Various forms of computer readable media may be involved in carrying oneor more sequences of one or more instructions to the processor (or anyother processor of a device described herein) for execution. Forexample, the instructions may initially be borne on a magnetic disk of aremote computer. The remote computer can load the instructions into itsdynamic memory and send the instructions over an Ethernet connection,cable line, or even telephone line using a modem. A communicationsdevice local to a computing device (or, e.g., a server) can receive thedata on the respective communications line and place the data on asystem bus for the processor. The system bus carries the data to mainmemory, from which the processor retrieves and executes theinstructions. The instructions received by main memory may optionally bestored in memory either before or after execution by the processor. Inaddition, instructions may be received via a communication port aselectrical, electromagnetic or optical signals, which are exemplaryforms of wireless communications or data streams that carry varioustypes of information.

Servers of the present invention may also interact and/or control one ormore user devices or terminals. The user device or terminal may includeany one or a combination of a personal computer, a mouse, a keyboard, acomputer display, a touch screen, LCD, voice recognition software, orother generally represented by input/output devices required toimplement the above functionality. The program also may include programelements such as an operating system, a database management system and ½device drivers•that allow the processor to interface with computerperipheral devices (e.g., a video display, a keyboard, a computer mouse,etc).

For example, a user provides instructions for the amount of the livingbenefit payment that is requested. It should be understood that the usermay communicate with the computing system directly or indirectly throughanother party, such as the insurance provider 702. In the event the usercommunicates with an insurance provider 702, the insurance provider 702than receives and transfers information, to and from the insurancecontract generating system 714 via the text data input module 724, audiodata input module 728, audio data output module 730 and the displaymodule 704. For example, the relevant life may provide instructions tothe insurance provider 702 indicating the amount of living benefitpayments the relevant life would like to receive. Furthermore, as usedherein the data storage module 722 is also referred to as a storagedevice. The processing module 718 is contained within the insurancecontract generating system 714, which is coupled to the storage device,the storage device stores instructions that are utilized by theprocessor. The instructions comprise: (i) an instruction for calculatinga payment base; (ii) an instruction for calculating a contract value;(iii) an instruction for determining a withdrawal percent table thatprovides a particular withdrawal percent based on the age of therelevant life; and (iv) an instruction for calculating a lifetimebenefit payment; wherein the lifetime benefit payment withdrawal isdetermined by the following formula:

LBP withdrawal=(a Withdrawal Percent)×(a Withdrawal Base),

wherein the withdrawal percent is predetermined according to awithdrawal percent table and wherein the adjustment factor is modifiedover time.

Turning now to FIG. 8, shown are supplemental tables 800, 828, and 834,wherein each table illustrates exemplary values, which are strictly forthe purposes of illustration and are not meant to limit the scope of theinvention. Supplemental table 800 illustrates the initial investment orpayment base 802 invested by the relevant life. For this example,payment base 802 is $100,000. Supplemental table 828 illustrates variouswithdrawal percents 832, wherein each withdrawal percent 832 directlycorresponds to a range of ages 830. Supplemental table 834 illustratesvarious Cost of Living Allowance (COLA) inflation percents 838, whereineach COLA inflation percent 838 corresponds to the number of years 836the lifetime benefit payment is deferred by the relevant life. Forexample, if the relevant life decides to defer the lifetime benefitpayment for 3 years, whereby the relevant life withdraws the firstlifetime benefit payment on the fourth year, the relevant life isentitled to an additional 0.75% withdrawal rate for each subsequentlifetime benefit payment withdrawal. Accordingly, supplemental tables800, 828, and 834 provide information that is pertinent to the exampleillustrated by table 806.

Referring now to table 806, illustrated are exemplary lifetime benefitpayments 820, 822, 824, and 826 as function of age for annuities paid tothe relevant life under various benefit plans. More specifically, ½ Wait5 no Infl•column 810 represents lifetime benefit payments 820 withdrawnby the relevant life, whereby the relevant life deferred the first fivelifetime benefit payments 820. Thus, in this example, the relevant lifecollected the first lifetime benefit payment 820 on the sixth year ofeligibility, wherein the first year of eligibility occurred within theyear the relevant life turned 60, as indicated by ½ Age•column 808.Hence, the relevant life withdrew the first lifetime benefit payment 820at the age of 65. Consequently, by applying the information fromsupplemental tables 800 and 828, the relevant life is entitled to a 5.5%withdrawal rate of payment base 802 (i.e. $100,000). Supplemental table834 is purposely not incorporated into the example illustrated by column810 in order to demonstrate the benefits of the present invention.Therefore, the relevant life receives $5,500 a year for 21 years. Wait 5with Infl•column 812 illustrates lifetime benefit payments 822 withdrawnby the relevant life, whereby the relevant life deferred the first fivelifetime benefit payments 822. Thus, the relevant life collected thefirst lifetime benefit payment 822 on the sixth year of eligibility.Hence, the relevant life withdrew the first lifetime benefit payment 822at the age of 65. Consequently, by implementing the information fromsupplemental tables 800, 828, and 834, the relevant life is entitled toa 5.5% withdrawal percent 832 of payment base 802 (i.e. $100,000) on thefirst year, which equates to a lifetime benefit payment 822 of $5,500.Additionally, for each subsequent year, the relevant life is entitled toapply an additional COLA inflation percent 838 to the previous lifetimebenefit payment. For this example, since the relevant life deferred thefirst five years of lifetime benefit payments 822, the COLA inflationpercent 838 that the relevant life is entitled to is 1.25% asillustrated by supplemental table 834. Therefore, at the age of 66, therelevant life will receive an additional 1.25% of $5,500, the initiallifetime benefit payment 822. Consequently, the total lifetime benefitpayment 822 that the relevant life will receive at the age of 66 is$5,569. This process repeats until the last lifetime benefit payment 822is withdrawn by the relevant life (i.e. the year the relevant life turns85), wherein the lifetime benefit payment 822 has reached $7,051. ½ Wait10 no Infl•column 814 illustrates lifetime benefit payments 824withdrawn by the relevant life, whereby the relevant life deferred thefirst ten lifetime benefit payments 824. ½ Wait 10 no Infl•column 814follows the same principles as extensively discussed above whendescribing ½ Wait 5 no Infl•column 810, the only difference is that therelevant life defers an additional five years (a total of 10 yearsdeferred) before lifetime benefit payments 824 are withdrawn. Byapplying the information supplied by supplemental tables 800 and 828,and as illustrated by table 806 the relevant life is entitled to a 6.0%withdrawal percent 832 of payment base 802 (i.e. $100,000). Thus, therelevant life receives a total of 16 lifetime benefit payments 824 of$6,000. Accordingly, Wait 10 with Infl•column 816 follows the sameprinciples as extensively discussed above when describing Wait 5 withInfl•column 812, the only difference is that the relevant life defers anadditional five years (a total of 10 years deferred) before collectingthe first lifetime benefit payment 826. Consequently, by applying theinformation supplied by supplemental tables 800, 828 and 834, and asillustrated by table 806, the relevant life is entitled to a 6.0%withdrawal percent 832 of payment base 802 (i.e. $100,000). Thus, thefirst lifetime benefit payment 826 withdrawn by the relevant life is inthe amount of $6,000, however a COLA inflation percent 838 of 2.50% isapplied to each previous lifetime benefit payment 826 in order tocalculate each subsequent lifetime benefit 826 in which the relevantlife is entitled. For example at the age of 71, the relevant lifereceives a lifetime benefit payment 826 in the amount of $6,150.Additionally, ½ Age•column 808 tracks the age of the relevant life inyears. For this example, table 806 illustrates a range between 60 and 85years of age, however the invention should not be limited to this range.Furthermore, although the age of the relevant life is represented inyears, various other periods of time may be used (i.e. days, weeks,months, decades, etc.).

FIG. 9 illustrates a graph 900, titled ½ Guaranteed Lifetime BenefitPayments ‘Flat Income Benefit vs Rising Income Benefit’ Annual IncreaseBased on Years Income is Deferred,•which further illustrates the examplerepresented by table 806 of FIG. 8. More specifically, graph 900includes a ½ Guaranteed Lifetime Benefit•or withdrawal scale 902, whichillustrates withdrawal values or lifetime benefit payments 916, 918,920, and 922 as a function of age 904 during a 26 year period. Ages 904ranging from 60 to 85 are illustrated on the x-coordinate of graph 900so as to accurately correspond to table 806 of FIG. 8. Essentially,graph 900 visually illustrates the example represented by table 806 ofFIG. 8. The key 906 provided by FIG. 9 illustrates the symbols used torepresent which line on graph 900 corresponds to the respective columnof table 806. More specifically, Wait 5 no Infl•column 810 isgraphically illustrated on graph 900 by ½ Wait 5 no Infl•line 908, whichis represented by a line containing squares. For example, the year inwhich the relevant life turns 65, ½ Wait 5 no Infl•line 908 accuratelyillustrates a lifetime benefit payment 916 of $5,500. Furthermore, ½Wait 5 no Infl•line 908 remains at $5,500 with respect to the relevantlife s age throughout graph 900, thus, accurately expressing lifetimebenefit payments 820 of ½ Wait 5 no Infl•column 810 of table 806.Additionally, graph 900 visually illustrates each of the remainingabove-referenced columns 812, 814, and 816 by lines 910, 912, and 914respectively. Therefore, each line 908, 910, 912, and 914 illustrated ongraph 900 directly corresponds to each of the above-referenced columns810, 812, 814, and 816 of table 806, respectively.

In one embodiment of the present invention, the payment base is relatedto premium payments by the relevant life wherein some of the premiumpayments may be discretionary. In one embodiment, the lifetime benefitpayment is dependent on a predetermined withdrawal percent table that isdetermined by the company issuing the annuity and/or the relevant life.Preferably, the withdrawal percent is based on the attained age of therelevant life and is provided according to the predetermined withdrawalpercent table that is predetermined by the company issuing the annuity.

Further, the adjustment factor is preferably determined by a formulathat is related to the number of deferred years waited by the relevantlife until a first lifetime benefit payment withdrawal is requested. Theformula for determining the adjustment factor is predetermined by thecompany issuing the annuity. In a preferred embodiment the adjustmentfactor is determined by the following formula:

Inflation Adjustment Factor=[1+(a predetermined factor)×(the number ofdeferred years waited by the relevant life until a first lifetimebenefit payment withdrawal is requested)]^(Y), wherein Y is equal to(the number of the lifetime benefit payment withdrawal year, wherein theyear of the first lifetime benefit payment withdrawal is set as yearnumber 1).

Preferably, the predetermined factor is in the range of 0%-5.0%. Morepreferably, the predetermined factor is in the range of 0.05%-2.0%. Mostpreferably, the predetermined factor is equal to 0.25%.

In a preferred embodiment, (the Withdrawal Percent)×(the adjustmentfactor) must be equal to or less than a predetermined maximum percent.Preferably, the predetermined maximum percent is in the range of 0% to25.0%. More preferably, the predetermined maximum percent is in therange of 1.0% to 15.0%. Most preferably, the predetermined maximumpercent is equal to 10.0%.

The annuity commencement date is discretionary and is selected by thecompany issuing the annuity and/or the relevant life, with certainrestrictions. The initial guaranteed death benefit amount isdiscretionary and is determined by the company issuing the annuityand/or the relevant life. Preferably, the company issuing the annuitysets the initial guaranteed death benefit amount for calculationpurposes. In a preferred embodiment, the initial guaranteed deathbenefit amount is equal to the payment base.

The lifetime benefit payment is paid periodically, such as yearly,quarterly, monthly, weekly, etc. The lifetime benefit payment that isrequested by the relevant life for a given period may be any amountgreater than zero and equal to or less than the (the WithdrawalPercent)×(a Withdrawal Base)×(an adjustment factor), wherein theWithdrawal Percent is predetermined according to a withdrawal percenttable and wherein the adjustment factor is modified over time, andpreferably related to the number of deferred years waited by therelevant life until a first lifetime benefit payment withdrawal isrequested. The available lifetime benefit payment is determined at eachperiod by the aforementioned formula. In a preferred embodiment, therelevant life does not have to wait for the contract anniversary date inorder to request the withdrawal percent that corresponds to his attainedage as provided by a predetermined withdrawal percent table.

The withdrawal base may be equal to the amount of the original premium,the Payment Base, the Contract Value, or the greater of the Payment Baseand the Contract Value. In most cases, the value of (the PaymentBase)×(the Withdrawal Percent)×(the adjustment factor) will not be equalto (the present Contract Value)×(the Withdrawal Percent)×(the adjustmentfactor). Therefore, in some embodiments the higher of these two valuesis the highest available lifetime benefit payment available for thatperiod. However, the relevant life does not have to elect the highestpossible available lifetime benefit payment. The value that isrequested, if any, for the lifetime benefit payment for that period willbe subtracted from the contract value, but not from the payment base.Therefore, the higher the lifetime benefit payment requested for aperiod, then the greater the possible impact on the value of (thepresent Contract Value)×(the Withdrawal Percent)×(the adjustment factor)for the subsequent period.

Preferably, the withdrawal percent is a function of the relevant life sage; in other words, the withdrawal percent increases with the age ofthe relevant life and is provided by the predetermined withdrawalpercent table. In one embodiment, the relevant life must be a minimumage to begin taking lifetime benefit payments.

In one embodiment, the withdrawal percent table has a minimum withdrawalpercent of 5% for any given attained age. Other minimum withdrawalpercents may be used. Preferably, the first few number of attained ageyears after the minimum age to begin taking lifetime benefit paymentsthat are listed in the withdrawal percent table are set to the minimumwithdrawal percent value. Preferably, each of the attained age years of60-64 has a 5% withdrawal percent.

In one embodiment, the withdrawal percent table has a maximum withdrawalpercent of 7.0% for any given attained age year. Other maximumwithdrawal percents may be used. Preferably, the withdrawal percentsincrease as the relevant life ages until the maximum withdrawal percentis reached. Preferably, each of the attained age years equal to orgreater than 80 years old of the withdrawal percent table has a 7.0%withdrawal percent.

In a preferred embodiment, the withdrawal percent table is as follows:

Available Attained Age of Withdrawal Relevant Life Percentage 60-64 5.0%65-69 5.5% 70-74 6.0% 75-79 6.5% 80 and above 7.0%

In one embodiment, once the first lifetime benefit payment withdrawal istaken, then the withdrawal percent is fixed for the remainder of thecontract. In another embodiment, the withdrawal percent continues torise with the relevant life s age, no matter if the relevant life hasalready begun to take lifetime benefit payments. In another embodiment,the withdrawal percent may either increase or decrease over the term ofthe annuity. Alternatively, the withdrawal percent may fluctuate overthe term of the annuity.

In a further embodiment, the present method further comprises the stepof collecting a rider fee or collecting an account maintenance fee. Inanother embodiment, the present method further comprises the step of:calculating a death benefit for a beneficiary upon the death of therelevant life, wherein the death benefit is the greater of: (a) apredetermined guaranteed death benefit amount; and (b) the presentcontract value. Alternatively, the guaranteed death benefit is paid tothe beneficiary only if the relevant life dies during the accumulationphase. Preferably, the value of the annuity payments, if any, equals thevalue of the most recent lifetime benefit payment.

In another embodiment, the present invention comprises a deferredvariable annuity contract comprising: (i) means for calculating apayment base; (ii) means for calculating a contract value; (iii) meansfor determining a withdrawal percent table; and (iv) means forcalculating a lifetime benefit payment; wherein the lifetime benefitpayment withdrawal is determined by the following formula:

LBP withdrawal=(a Withdrawal Percent)×(a Withdrawal Base)×(an AdjustmentFactor),

wherein the withdrawal percent is predetermined according to awithdrawal percent table and wherein the adjustment factor is modifiedover time. Preferably, the adjustment factor is related to the number ofdeferred years waited by the relevant life until a first lifetimebenefit payment withdrawal is requested.

In another embodiment, the present invention comprises a system foradministering a deferred variable annuity contract during theaccumulation phase, the improvement comprising: administration meansoperative to calculate a lifetime benefit payment, wherein the lifetimebenefit payment withdrawal is determined by the following formula:

LBP withdrawal=(a Withdrawal Percent)×(a Withdrawal Base)×(an AdjustmentFactor),

wherein the withdrawal percent is predetermined according to awithdrawal percent table and wherein the adjustment factor is modifiedover time. Preferably, the adjustment factor is related to the number ofdeferred years waited by the relevant life until a first lifetimebenefit payment withdrawal is requested.

In another embodiment, the annuity product includes a step-up provisionwherein the payment base is increased in response to positiveperformance of the underlying investments of the contract for a givenperiod.

Other formulas may be utilized to determine the yearly lifetime benefitpayment amount, wherein the withdrawal base is related to other valuesbesides the payment base and/or the contract value.

The following description and examples further illustrate the preferredfeatures of the present invention.

Each time a lifetime benefit payment withdrawal request is received, thewithdrawal percent is provided by utilizing the withdrawal percent tableand looking up the corresponding age of the relevant life. The relevantlife does not have to wait for the contract anniversary date in order torequest the withdrawal percent that corresponds to his attained age asprovided by a predetermined withdrawal percent table. The lifetimebenefit payment withdrawal amount is then determined by the followingformula:

LBP withdrawal=(the Withdrawal Percent)×(a Withdrawal Base)×(anAdjustment Factor),

wherein the withdrawal percent is determined by said withdrawal percenttable. The withdrawal base may be equal to the original premium, thepayment base, the contract value, or the greater of the payment base andthe contract value. In the embodiment where the withdrawal base is equalto the greater of the payment base and the contract value, a test willbe performed to determine the greater of: (i) (the Payment Base)×(theWithdrawal Percent); and (ii) (the Contract Value)×(the WithdrawalPercent). The ½ guaranteed lifetime benefit payment•is equal to (thePayment Base)×(the Withdrawal Percent); and the ½ maximum lifetimebenefit payment•is equal to (the Contract Value)×(the WithdrawalPercent).

Preferably, the adjustment factor is related to the number of deferredyears waited by the relevant life until a first lifetime benefit paymentwithdrawal is requested. The formula for determining the adjustmentfactor is predetermined by the company issuing the annuity. In apreferred embodiment the adjustment factor is determined by thefollowing formula:

Inflation Adjustment Factor=[1+(a predetermined factor)×(the number ofdeferred years waited by the relevant life until a first lifetimebenefit payment withdrawal is requested)]^(Y), wherein Y is equal to(the number of the lifetime benefit payment withdrawal year, wherein theyear of the first lifetime benefit payment withdrawal is set as yearnumber 1).

Preferably, the predetermined factor is in the range of 0%-5.0%. Morepreferably, the predetermined factor is in the range of 0.05%-2.0%. Mostpreferably, the predetermined factor is equal to 0.25%.

In a preferred embodiment, (the Withdrawal Percent)×(the adjustmentfactor) must be equal to or less than a predetermined maximum percent.Preferably, the predetermined maximum percent is in the range of 0% to25.0%. More preferably, the predetermined maximum percent is in therange of 1.0% to 15.0%. Most preferably, the predetermined maximumpercent is equal to 10.0%. The relevant life may request a lifetimebenefit payment amount during each period that is up to the LBPwithdrawal amount, which in one embodiment is the greater of the ½guaranteed lifetime benefit payment•and the ½ maximum lifetime benefitpayment•.

The adjustment factor provides the relevant life with an incentive todefer the first withdrawal payment for as long as possible in order torealize greater inflation protection benefits further down the road andto make their future payments more than what they would be if they didnot defer the first benefit payment. Further, even after the firstwithdrawal request is taken, the adjustment factor continues to increaseeach year thereafter because the adjustment factor formula isexponentially related to the number of the lifetime benefit paymentwithdrawal year, wherein the year of the first lifetime benefit paymentwithdrawal is set as year number 1. Further, the greater the number ofdeferred years until the first benefit payment, then the greater thevalue that is exponentially increased which is the adjustment factor.The predetermined maximum percent does not permit the lifetime benefitpayment to exceed a predetermined percent of the Withdrawal Base.

As described herein, the adjustment factor varies over time and ispreferably a function of (i) the number of deferred years waited by therelevant life until a first lifetime benefit payment withdrawal isrequested; and (ii) the number of the lifetime benefit paymentwithdrawal year, wherein the year of the first lifetime benefit paymentwithdrawal is set as year number 1. In other embodiments, the adjustmentfactor remains constant over time once it is first established. Otherformulas may be utilized for determining the adjustment factor.Alternatively, a predetermined adjustment factor chart may be utilizedwherein the respective values of the adjustment factors are selected bythe company issuing the annuity and/or the relevant life. Preferably,the adjustment factor is related in some aspect to the number ofdeferred years waited by the relevant life until a first lifetimebenefit payment withdrawal is requested.

The following example illustrates one embodiment of the present methodand system. The following withdrawal percent table is set for thefollowing example. Such predetermined values for the percents and theattained age ranges for the withdrawal percent table are strictly forthe purposes of illustration. For example, the predetermined withdrawalpercentages may be in the range of 0% to 100%, and more preferably inthe range of 0% to 50%.

Withdrawal Percent Table: Available Attained Age of Withdrawal RelevantLife Percentage 60-64 5.0% 65-69 5.5% 70-74 6.0% 75-79 6.5% 80 and above7.0%

LBP withdrawal=(the Withdrawal Percent)×(a Withdrawal Base)×(anAdjustment Factor), wherein the withdrawal percent is determined by saidwithdrawal percent table.

Adjustment Factor=[1+(a predetermined factor)×(the number of deferredyears waited by the relevant life until a first lifetime benefit paymentwithdrawal is requested)]^(Y), wherein Y is equal to (the number of thelifetime benefit payment withdrawal year, wherein the year of the firstlifetime benefit payment withdrawal is set as year number 1).

the predetermined factor=0.25%.

(the Withdrawal Percent)×(the Adjustment Factor) must be equal to orless then 10%.

Note: For purposes of illustration, the relevant life cannot takelifetime benefit payments until reaching age 60.

Example 1

-   -   Relevant life buys an annuity contract on Mar. 31, 1983 at age        60 and 8 months;    -   Relevant life starts taking lifetime benefit payments on Apr.        31, 1983 at age 60 and 9 months, therefore the Withdrawal        Percent is locked in at 5.0%;    -   The number of deferred years waited by the relevant life until a        first lifetime benefit payment withdrawal is requested=0.

The Adjustment Factor=[1+(0.25%)×(0)]^(Y)=[1+0]^(Y)=[1]^(Y)

For the purposes of illustration, the withdrawal base is equal to thepayment base. Additionally, for the purposes of illustration, therelevant life is 60 years old on Mar. 31, 1983 and his birthday is onMar. 31, 1983. That is, his birthday and the contract anniversary dateare the same.

The available lifetime benefit payments are as follows:

Requested Age of lifetime relevant Premium Payment Withdrawal Adjustmentbenefit life Period Started Payment Base Percent Y Factor payment 60Mar. 31, 1983 100,000 100,000 5.0% 1 1 5,000 61 Mar. 31, 1984 — 100,0005.0% 2 1 5,000 62 Mar. 31, 1985 — 100,000 5.0% 3 1 5,000 63 Mar. 31,1986 — 100,000 5.0% 4 1 5,000 64 Mar. 31, 1987 — 100,000 5.0% 5 1 5,00065 Mar. 31, 1988 — 100,000 5.0% 6 1 5,000 66 Mar. 31, 1989 — 100,0005.0% 7 1 6,000 67 Mar. 31, 1990 — 100,000 5.0% 8 1 7,000 68 Mar. 31,1991 — 100,000 5.0% 9 1 8,000

Example 2

-   -   Relevant life buys an annuity contract on Mar. 31, 1983 at age        60 and 8 months;    -   Relevant life starts taking lifetime benefit payments on Apr.        31, 1984 at age 61 and 9 months, therefore the withdrawal        percent is locked in at 5.0%;    -   The number of deferred years waited by the relevant life until a        first lifetime benefit payment withdrawal is requested=1.

The Adjustment Factor=[1+(0.25%)×(1)]^(Y)=[1+0.25%]^(Y)=[1.0025]^(Y)

For the purposes of illustration, the withdrawal base is equal to thepayment base. Additionally, for the purposes of illustration, therelevant life is 60 years old on Mar. 31, 1983 and his birthday is onMar. 31, 1983. That is, his birthday and the contract anniversary dateare the same.

The available lifetime benefit payments are as follows:

Requested Age of lifetime relevant Premium Payment Withdrawal Adjustmentbenefit life Period Started Payment Base Percent Y Factor payment 60Mar. 31, 1983 100,000 100,000 N/A N/A N/A 0 61 Mar. 31, 1984 — 100,0005.0% 1 (1.0025)¹ 5012.50 62 Mar. 31, 1985 — 100,000 5.0% 2 (1.0025)²5025.03 63 Mar. 31, 1986 — 100,000 5.0% 3 (1.0025)³ 5037.59 64 Mar. 31,1987 — 100,000 5.0% 4 (1.0025)⁴ 5050.19 65 Mar. 31, 1988 — 100,000 5.0%5 (1.0025)⁵ 5062.81 66 Mar. 31, 1989 — 100,000 5.0% 6 (1.0025)⁶ 5075.4767 Mar. 31, 1990 — 100,000 5.0% 7 (1.0025)⁷ 5088.16 68 Mar. 31, 1991 —100,000 5.0% 8 (1.0025)⁸ 5100.88

Example 3

-   -   Relevant life buys an annuity contract on Mar. 31, 1983 at age        60 and 8 months;    -   Relevant life starts taking lifetime benefit payments on Apr.        31, 1987 at age 64 and 9 months, therefore the withdrawal        percent is locked in at 5.0%;    -   The number of deferred years waited by the relevant life until a        first lifetime benefit payment withdrawal is requested=4.

The Adjustment Factor=[1+(0.25%)×(4)]^(Y)=[1+1.00%]^(Y)=[1.01]^(Y)

For the purposes of illustration, the withdrawal base is equal to thepayment base. Additionally, for the purposes of illustration, therelevant life is 60 years old on Mar. 31, 1983 and his birthday is onMar. 31, 1983. That is, his birthday and the contract anniversary dateare the same.

The available lifetime benefit payments are as follows:

Requested Age of lifetime relevant Premium Payment Withdrawal Adjustmentbenefit life Period Started Payment Base Percent Y Factor payment 60Mar. 31, 1983 100,000 100,000 N/A N/A N/A 0 61 Mar. 31, 1984 — 100,000N/A N/A N/A 0 62 Mar. 31, 1985 — 100,000 N/A N/A N/A 0 63 Mar. 31, 1986— 100,000 N/A N/A N/A 0 64 Mar. 31, 1987 — 100,000 5.0% 1 (1.01)¹5050.00 65 Mar. 31, 1988 — 100,000 5.0% 2 (1.01)² 5100.50 66 Mar. 31,1989 — 100,000 5.0% 3 (1.01)³ 5151.51 67 Mar. 31, 1990 — 100,000 5.0% 4(1.01)⁴ 5203.02 68 Mar. 31, 1991 — 100,000 5.0% 5 (1.01)⁵ 5255.05

Example 4

-   -   Relevant life buys an annuity contract on Mar. 31, 1983 at age        60 and 8 months;    -   Relevant life starts taking lifetime benefit payments on Apr.        31, 2003 at age 80 and 9 months, therefore the withdrawal        percent is locked in at 7.0%;    -   The number of deferred years waited by the relevant life until a        first lifetime benefit payment withdrawal is requested=20.

The Adjustment Factor=[1+(0.25%)×(20)]^(Y)=[1+5.00%]^(Y)=[1.05]^(Y)

For the purposes of illustration, the withdrawal base is equal to thepayment base. Additionally, for the purposes of illustration, therelevant life is 60 years old on Mar. 31, 1983 and his birthday is onMar. 31, 1983. That is, his birthday and the contract anniversary dateare the same.

The available lifetime benefit payments are as follows:

Requested Age of lifetime relevant Premium Payment Withdrawal Adjustmentbenefit life Period Started Payment Base Percent Y Factor payment 60Mar. 31, 1983 100,000 100,000 N/A N/A N/A 0 61 Mar. 31, 1984 — 100,000N/A N/A N/A 0 62 Mar. 31, 1985 — 100,000 N/A N/A N/A 0 63 Mar. 31, 1986— 100,000 N/A N/A N/A 0 64 Mar. 31, 1987 — 100,000 N/A N/A N/A 0 65 Mar.31, 1988 — 100,000 N/A N/A N/A 0 66 Mar. 31, 1989 — 100,000 N/A N/A N/A0 67 Mar. 31, 1990 — 100,000 N/A N/A N/A 0 68 Mar. 31, 1991 — 100,000N/A N/A N/A 0 69 Mar. 31, 1992 — 100,000 N/A N/A N/A 0 70 Mar. 31, 1993— 100,000 N/A N/A N/A 0 71 Mar. 31, 1994 — 100,000 N/A N/A N/A 0 72 Mar.31, 1995 — 100,000 N/A N/A N/A 0 73 Mar. 31, 1996 — 100,000 N/A N/A N/A0 74 Mar. 31, 1997 — 100,000 N/A N/A N/A 0 75 Mar. 31, 1998 — 100,000N/A N/A N/A 0 76 Mar. 31, 1999 — 100,000 N/A N/A N/A 0 77 Mar. 31, 2000— 100,000 N/A N/A N/A 0 78 Mar. 31, 2001 — 100,000 N/A N/A N/A 0 79 Mar.31, 2002 — 100,000 N/A N/A N/A 0 80 Mar. 31, 2003 — 100,000 7.0% 1(1.05)¹ 7350.00 81 Mar. 31, 2004 — 100,000 7.0% 2 (1.05)² 7717.50 82Mar. 31, 2005 — 100,000 7.0% 3 (1.05)³ 8103.38 83 Mar. 31, 2006 —100,000 7.0% 4 (1.05)⁴ 8508.54 84 Mar. 31, 2007 — 100,000 7.0% 5 (1.05)⁵8933.97 85 Mar. 31, 2008 — 100,000 7.0% 6 (1.05)⁶ 9380.67 86 Mar. 31,2009 — 100,000 7.0% 7 (1.05)⁷ 9849.70 87 Mar. 31, 2010 — 100,000 7.0% 8(1.05)⁸ 10,000.00 88 Mar. 31, 2011 — 100,000 7.0% 9 (1.05)⁹ 10,000.00In the above example, (the Withdrawal Percent)×(the Adjustment Factor)exceeded 10% for the last two payment years, therefore the lifetimebenefit payment was set at $10,000.00 for the last two years provided inthe example.

Having thus described the invention in rather full detail, it will beunderstood that such detail need not be strictly adhered to, but thatadditional changes and modifications may suggest themselves to oneskilled in the art, all falling within the scope of the invention asdefined by the subjoined claims.

While the present invention has been described with reference to thepreferred embodiment and several alternative embodiments, whichembodiments have been set forth in considerable detail for the purposesof making a complete disclosure of the invention, such embodiments aremerely exemplary and are not intended to be limiting or represent anexhaustive enumeration of all aspects of the invention. The scope of theinvention, therefore, shall be defined solely by the following claims.Further, it will be apparent to those of skill in the art that numerouschanges may be made in such details without departing from the spiritand the principles of the invention. It should be appreciated that thepresent invention is capable of being embodied in other forms withoutdeparting from its essential characteristics.

1. A computer system for processing data associated with a deferredvariable annuity contract during the accumulation phase, comprising: astorage device including data relating to the deferred variable annuitycontract, including: a payment base value, a contract value, awithdrawal percent value, a withdrawal base value, and data indicativeof a guarantee of available periodic benefit payments; and a processoroperatively coupled to the storage device, the processor configured to:determine a maximum benefit payment available in a period in accordancewith the guarantee, responsive to the withdrawal percent value, thewithdrawal base value and a factor, the factor being at least 1 andhaving a value that increases with (1) duration between a time one ofthe benefit payments was first available and a time of a first one ofthe benefit payments; and (2) duration from a first one of the benefitpayments until the period; and provide an output signal having dataindicative of the determined maximum benefit payment available in theperiod.
 2. The computer system of claim 1, wherein withdrawals do notdecrease the payment base value when the cumulative withdrawals during aperiod are not more than the maximum available benefit payment for theperiod.
 3. The computer system of claim 1, further comprising acommunication module in communication with the processor and configuredto receive via a network data indicative of a requested withdrawal. 4.The computer system of claim 3, further comprising a payment module incommunication with the processor, the payment module being configured toeffect payments of requested withdrawals to a relevant life.
 5. Thecomputer system of claim 4, further comprising a contract generatingmodule configured to generate insurance contracts including the deferredvariable annuity contract.
 6. The computer system of claim 1, whereinthe processor is further configured to increase the value of the factorincrementally with milestones of the duration between a time one of thebenefit payments was first available and a first one of the benefitpayments.
 7. The computer system of claim 1, wherein the benefitpayments are available annually for a lifetime of a relevant life.
 8. Acomputer-implemented method for processing data related to a deferredvariable annuity contract during the accumulation phase, comprising:storing in a storage device data relating to the deferred variableannuity contract, including: a payment base value, a contract value, awithdrawal percent value, a withdrawal base value, and data indicativeof a guarantee of available periodic benefit payments; determining by aprocessor in communication with the storage device a maximum benefitpayment available in a current period in accordance with the guarantee,responsive to the withdrawal percent value, the withdrawal base valueand a factor, the factor being at least 1 and having a value thatincreases with (1) duration between a time one of the benefit paymentswas first available and a time of a first one of the benefit payments;and (2) duration from the time of the first one of the benefit paymentsuntil the current period; and providing an output signal by theprocessor having data indicative of the determined maximum availablebenefit payment.
 9. The computer-implemented method of claim 8, furthercomprising a communications port in communication with the processor andconfigured to communicate via a network to a relevant life the dataindicative of the determined maximum available benefit payment.
 10. Thecomputer-implemented method of claim 8, wherein the withdrawal basevalue is not less than the payment base value, and withdrawals do notdecrease the payment base value when the cumulative withdrawals during aperiod are not more than the maximum available benefit payment for theperiod.
 11. The computer-implemented method of claim 10, wherein thepayment base value is initially equal to a sum of premiums paid.
 12. Thecomputer-implemented method of claim 8, wherein the factor is determinedbased on a number of completed periods from a time one of the benefitpayments was first available until a first one of the benefit paymentsand a predetermined factor to obtain an intermediate value, adding 1 tothe intermediate value to obtain a sum, and raising the sum to a powerbased on the number of completed and partial periods from the first oneof the benefit payments to the current period.
 13. Thecomputer-implemented method of claim 12, wherein the predeterminedfactor is in the range of 0.0005 to 0.02.
 14. The computer-implementedmethod of claim 12, wherein the periods are one year in duration.
 15. Atangible computer-readable medium having processor-executableinstructions stored thereon, which instructions, when executed by aprocessor, cause the processor to: access from a storage device incommunication with the processor data relating to a deferred variableannuity contract, including: a payment base value, a contract value, awithdrawal percent value, a withdrawal base value, and data indicativeof a guarantee of available periodic benefit payments; and determine amaximum benefit payment available in a current period in accordance withthe guarantee, based on the withdrawal percent value, the withdrawalbase value and a factor, the factor being at least 1 and having a valuethat increases with (1) duration between a time one of the benefitpayments was first available and a first one of the benefit payments;and (2) duration from the first one of the benefit payments to thecurrent period.
 16. The tangible computer-readable medium of claim 15,wherein the instructions further cause the processor to: access dataindicative of a maximum value of a product of the withdrawal percent andthe factor.
 17. The tangible computer-readable medium of claim 15,wherein the instructions further cause the processor to: compare themaximum benefit payment available in the current period to a sum ofwithdrawals during the current period and, responsive to determiningthat the sum of withdrawals during the period exceeds the maximumbenefit payment available, determine a reduction in the payment basevalue, and provide an output signal indicative of the reduced paymentbase value.
 18. The tangible computer-readable medium of claim 17,wherein the instructions further cause the processor to determine thecontract value based on adding a sum of purchase payments, subtractingfees and surrenders, and adjusting for performance of investment optionsselected by an owner of the contract.
 19. The tangible computer-readablemedium of claim 18, wherein the factor is determined based on anintermediate value, the intermediate value being based on a number ofcompleted periods from a time one of the benefit payments was firstavailable until a first one of the benefit payments and a predeterminedfactor, and raising the intermediate value to a power based on a numberof partial and completed periods subsequent to the first one of thebenefit payments.
 20. The tangible computer-readable medium of claim 19,wherein the periods are each one year in duration.